What a ‘No-Deal Brexit’ Means and Why It’s a Risk Again

The threat of a no-deal Brexit is back, and companies on both sides of the English Channel are gearing up once again for the scenario they consider the worst case. Boris Johnson, the U.K.’s new prime minister, has vowed to lead the country out of the European Union on Oct. 31, whether or not he secures a deal to smooth the process of untangling more than 40 years of integration.

It means a U.K.-EU divorce with no agreement in place on how to continue doing business with each other. Absent a negotiated deal to smooth the transition, many rules, permits and accords evaporate overnight. Free trade between Britain and the EU would give way to basic World Trade Organization import-export tariffs and become subject to border checks where now there are none. Data-sharing across borders would be at risk -- plunging businesses into legal jeopardy -- and some financial transactions would be blocked. Contracts risk becoming invalid. EU citizens living in the U.K. and Britons living on the continent could be stranded without permission to remain.