I know some Members will dismiss this as scaremongering, but for those who believe good times are just around the corner if we move to WTO terms, let me quote the President of the Confederation of British Industry, John Allan, who said last week:

'The notion that we're the only major nation on earth operating just on WTO terms seems to me to be saying we're confident we have a mile race but we'll give everyone else a lap start—and don't worry, we're so good we're going to make it up. Frankly,' he said,

'I think that's cloud cuckoo land.'

Those who argue 'no deal' would be preferable because it would allow the UK to negotiate new free trade agreements are in denial. Even on the UK Government's very optimistic set of assumptions, new free trade agreements would add 0.2 per cent to our GDP, compared to the 8 per cent to 10 per cent loss caused by the reduction in access to European markets. The reasons for these macroeconomic effects are not difficult to explain. The Welsh economy is intimately linked to the EU single market, with some 60 per cent of identifiable Welsh exports going to EU countries. If we leave with no deal, the UK Government will have hard choices to make. WTO rules mean that, without a free trade agreement, we cannot continue to trade tariff free with the EU-27 while we charge tariffs on similar products from other countries. We will have separate choices to make on each and every type of good. Either we impose tariffs on EU products, fuelling inflation, eroding living standards, and, at the least, making life more expensive and difficult for those who use European-made components in their production, or we unilaterally cut tariffs, undermine our bargaining position, and risk UK producers being undercut by countries with lower cost bases and far lower environmental and labour market standards.

In any circumstances, under a 'no deal', we would see new EU tariffs affecting many sectors and the goods they produce for export, undermining competitiveness. And it's misleading to suggest the impact of tariffs will be offset by a further fall in the value of sterling. According to surveys by the Engineering Employers' Federation, only 6 per cent of manufacturers believe weaker sterling would help them, quite apart from the fact that a fall in sterling stokes inflation and further erodes living standards. Those already struggling will be the ones who bear the brunt if their wage packet can't keep up with the cost of living. 

The technical notices issued by the UK Government lay bare the realities of increased bureaucracy and complexity in terms of non-tariff barriers, which economists believe have an even bigger negative effect on businesses—new demands for technical accreditation, customs declarations, export controls, new VAT processes and liabilities. And those who provide services in the EU-27 will also find their market access drastically curtailed. Moreover, they will be faced with different sets of rules and regulations in each of the member states. For many small businesses, this would quite literally make it impossible to export. 

And, for our education sector, loss of access to research funding, collaborations, exchange programmes and international talent will not just damage our universities and colleges, but stifle innovation and narrow our horizons. So, let's be in no doubt that, in terms of our economy, a 'no deal' Brexit would be a disaster, and, as I've already stressed, a smaller economy means fewer, less well-paid jobs, less money coming in to hard-pressed households. It also means a fall in income to the Exchequer. Less profitable and fewer businesses and lower incomes means a smaller tax base. That means hard choices being made: choices to cut public expenditure still further, to increase the tax burden or to increase public borrowing. None are attractive options over the long term. And the risk is that a right-wing Government will respond by trying to reduce costs and boost competitiveness not by investment, but by cutting back on labour market rights and environmental standards, following the Singapore model praised so lavishly by Foreign Secretary Jeremy Hunt. Singapore—to where I read today the great champion of Brexit, James Dyson, has moved his headquarters, from Wiltshire. For many other proponents of Brexit, it’s perfectly clear that leaving the European Union is the first step, and not the final word, on a path to a Britain of increased job insecurity and fewer protections.

In the course of this afternoon, my colleagues have made it clear that, even faced with the prospect of a catastrophic 'no deal' Brexit, we are doing what we can, limited though it inevitably is, to help mitigate the impact, including by putting in place our new Preparing Wales website as an important information resource for citizens. This is true also in terms of the broader economy, though I'm mindful of what I have been told over recent days by leading Welsh businesspeople— that we should not pretend that anything we can do will compensate for a situation where exporting for small businesses becomes unviable.

We'll continue to take pride in our achievements as a nation and promote Wales as a place to live, work, to invest and do business, stepping up our international profile and underlining that, in Wales at least, we continue to welcome those who have chosen to come from abroad to study, work and make their lives here. We will continue to be guided by the core principles set out in the economic action plan, above all, the commitment to develop a new and dynamic relationship between Government and business that is based on the principle of public investment with a social purpose.

We are using our new business resilience fund—as the economy Minister said earlier—to provide financial help to businesses as they seek to get ready for Brexit, and our business portal to identify what they need to do. We're discussing with the Development Bank of Wales how they might respond quickly and flexibly to the cash-flow problems that might affect businesses in a 'no deal' scenario, including making use of £130 million flexible investment fund, created in response to Brexit in 2017. Should 'no deal' occur, we will also seek to balance calls for immediate and direct support to struggling businesses against investments, such as in our physical and digital infrastructure and skills base, which will bring benefit to businesses across whole regions and the wider economy in Wales.

I want to conclude by re-emphasising the clear message given by this National Assembly last week, and given again by the First Minister, that the UK Government must take 'no deal' Brexit off the table. If 'no deal' becomes a reality, there will be a clear responsibility on the UK Government to release funding to the Welsh Government to enable us to work with and support business and other partners as they seek to respond to the negative impacts that will flow from such a disastrous outcome. And the disproportionate impact of a 'no deal' Brexit on Wales means that a basic Barnett consequential will in no way be adequate for this. We will do everything within our power to hold the UK Government to its responsibility and to prioritise jobs and growth here at home.