May won't rule out no-deal Brexit; bank says firms not ready

British Prime Minister Theresa May refused Thursday to rule out Britain leaving the European Union without a deal, a day after the Bank of England warned that such a scenario could plunge the country into its deepest recession in decades.

May was asked by a committee of lawmakers whether she would act to stop a no-deal Brexit if Parliament throws out the agreement when it votes on Dec. 11.

She said "if the House were to vote down the deal that has been agreed" there would have to be "some practical steps in relation to no deal."

"Decisions would have to be taken," she said.

May has been highlighting the risks of leaving the EU without a deal in a bid to persuade skeptical lawmakers to back the divorce agreement she has struck with the EU.

The Bank of England said Wednesday that in a worst-case no-deal scenario, Britain's economy would shrink 8 percent within months as unemployment and inflation soared and the value of the pound plunged.

Bank governor Mark Carney said Thursday that most British businesses were not prepared for a no-deal Brexit. Carney told the BBC that "less than half of businesses have initiated" contingency plans designed to protect operations in the event that Britain leaves the 28-nation bloc without an agreement on future trading relations.

"All the industries, all the infrastructure of the country, are they all ready at this point in time? As far as we can tell, the answer is no," he said.

Economists say a no-deal Brexit would hurt many British businesses, especially manufacturers in sectors like the auto industry, which rely on getting parts from multiple countries at short notice.

Ford Europe chief Steven Armstrong said a no-deal Brexit would be "an absolute disaster for the U.K. auto industry."

He said Ford was already spending money on no-deal contingency plans that it might never need and urged politicians to "ratify the agreement and remove the specter of the March 'cliff edge.'"

Britain's security minister, meanwhile, warned Thursday that leaving the EU without a deal could leave Britain at greater risk of terrorist attacks. Ben Wallace said ripping up the withdrawal agreement would see Britain "locked out of many of the EU security tools that currently help our police, law enforcement and criminal justice department do their job."

A government paper released Wednesday said that in a no-deal Brexit, Britain would lose access to EU systems for exchanging data including criminal records, alerts on wanted suspects, DNA, fingerprints and airline passenger information.

The deal between Britain and the EU lays out in detail the terms of Britain's departure, but leaves many details of the future relationship to be negotiated during a transition period of at least 21 months, and possibly longer.

Government economists said Wednesday that Britain will be poorer after Brexit than if it had stayed in the EU, no matter what sort of trade deal it secures with the bloc — but that the closest trade relationship would produce the least economic damage.

The EU says Britain will have to follow many of the bloc's rules and regulations if it wants full access to its markets, something pro-Brexit British politicians find hard to swallow.

May told lawmakers that Britain would be aiming to achieve "frictionless trade" with the bloc, but "there are those in the European Union who have yet to be persuaded of that argument."

The EU's chief Brexit negotiator, Michel Barnier, said the current withdrawal accord, struck between Britain and the bloc this month after a year and a half of negotiations, "is the only possible deal."

Briefing the European Parliament, Barnier said that despite the deal, "a long and winding road" lay ahead before Britain's departure on March 29.

"We are not at the end of the process," Barnier said. "The road ahead is long and it is up and down."