The possibility of a no-deal Brexit is “underpriced”, Stephen Barclay told MPs as he highlighted the lack of parliamentary time to steer an agreement through by October 31.
Tory leadership frontrunner Boris Johnson has suggested that the possibility of a no-deal Brexit is “a million-to-one against” despite his insistence on the Halloween deadline and a call for key parts of the Withdrawal Agreement to be ditched.
Brexit Secretary Mr Barclay, who backs Mr Johnson’s leadership bid, indicated that a no-deal break from the European Union may not be so unlikely.
There were only 24 sitting days for Parliament in September and October during which a new Brexit deal could be considered “so that is a very short period of time”, he said.
Then there was the question of whether there would be a concession from the EU “that is going to be palatable enough for Parliament to pass”.
He said he had explained to Brussels’ chief negotiator Michel Barnier that the deal would not make it through Parliament in its current form.
Both Mr Johnson and Jeremy Hunt have called for the Irish backstop – contingency measures designed to avoid a hard border – to be replaced, something which the EU has shown little sign of agreeing to.
Mr Barclay told MPs on the Brexit select committee: “I think a no deal is underpriced.
“It’s still this Government’s intention and both leadership candidates’ intention to seek a deal and I think it’s the will of many Members of Parliament for there to be a deal.
“But the question then will be ‘is there a deal that is palatable to Parliament’ and if not, will Parliament vote to revoke or will we leave with no deal?”
He acknowledged there was “confusion” about the risk of a no-deal Brexit.
“That is, in part, because people hear coming out of this building some people saying ‘no deal is the legal default’ and they hear of other people saying ‘Parliament will take no deal off the table’.”
The Brexit Secretary was questioned about his meeting with Mr Barnier earlier this month.
Reports from Brussels suggested Mr Barclay told Mr Barnier that the deal was dead five times during a confrontational meeting.
But Mr Barclay told MPs from the Exiting the European Union Select Committee that there had been “misleading information” about the meeting, although he did set out that the Withdrawal Agreement stood no chance of making it through Parliament in its current form.
“In terms of the Withdrawal Agreement, what I said was that the House had rejected it three times, including the third time by a significant margin; that the European election results in my view had further hardened attitudes across the House and that the text, unchanged, I did not envisage going through the House,” he said.
“I don’t think that was a particularly controversial observation.”
Mr Johnson repeated his view that not leaving the EU at all, ignoring the result of the 2016 referendum, would be more damaging than a no-deal Brexit.
Mr Barclay acknowledged that “a no-deal Brexit would be disruptive … But a no Brexit is the worst of those two outcomes”.
Following warnings from the National Farmers’ Union that a no-deal exit from the EU would result in shepherds being forced to slaughter their flocks because there would be no market for their meat, Mr Barclay acknowledged the problems that would face the industry.
Asked if there would also be compensation for the car industry if it faced 10% tariffs for exports to the EU in a no-deal situation, Mr Barclay said: “We are having extensive discussions with the industry, including the Prime Minister this week, because it is more nuanced.”
He said the sheep meat industry was an “outlier” because 97% of exports go to the EU, but that the Government was working on intervention measures and compensation.
There was a “huge amount the Government can do” to provide support, he added.
“Of course there will be impact, but the future trend is into areas such as electric vehicles and there’s a huge amount the Government can do in those areas, it’s not just what we have got in terms of the status quo.”
The Society of Motor Manufacturers and Traders believes that no-deal is “not an option”, but Mr Barclay said that was factually incorrect because it remained the legal default.
He acknowledged it was “undesirable” and “disruptive”, adding: “Are there mitigations the Government can take? Yes. Do I sit here saying that will be a panacea to all issues? No.”
He laughed off suggestions from Chancellor Philip Hammond that a no-deal Brexit could result in a £90 million hit to the economy.
Mr Barclay said the prediction was for 2035 and assumed there would not be any government intervention.
Mr Hammond also clashed with Tory Eurosceptic Jacob Rees-Mogg about the impact of a no-deal Brexit.
Mr Rees-Mogg, a prominent supporter of Mr Johnson, used a Daily Telegraph newspaper opinion piece to dismiss the “silliness” of the Treasury forecasts.
Mr Hammond said: “Happy to debate scale of negative impact of no deal on the economy – but terrifying that someone this close to a potential future government can think we’d actually be better off by adding barriers to access to our largest market.”