Brexit Britain: Are we heading for a messy departure?

"Brexit is an opportunity," said the Prime Minister yesterday. "It's an opportunity for us to get out there and embrace the world and I think the world is waiting."

But it may not be an easy one to grasp. Also speaking yesterday, Amyas Morse, the head of the National Audit Office, described the exit process as Britain's "biggest peacetime challenge". That, he said, was "only just beginning to click into awareness" for those in government.

"The government needs to act as far as possible in a unified way and we have an issue there because of departmental government," he added.

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"What we don't want to find is that at the first tap, this falls apart like a chocolate orange."

Ministers rebuffed Morse's warning, but there is broad agreement around Westminster that difficulties lie ahead.

The Brexit department has suffered a difficult week, with warnings raised about the nuclear regulation, consumer air travel and customs declarations - and a lukewarm reaction to the so-called "great repeal bill".

The Office for Budget Responsibility forecast that even if Brexit ended up reducing the UK's annual trend productivity growth rate by as little as 0.1 per cent over 50 years, the economy would be 4.8 per cent smaller than it would have been otherwise.

That is equivalent to a cost in lost GDP of almost £100bn in today's money, which would "translate into a £36bn hit to tax revenues", says The Independent.

To combat such gloomy predictions, Brexit secretary David Davis unveiled his three "position papers" covering nuclear regulation, judicial and administrative proceedings, and privileges and immunities. The UK, he said, seeks "a smooth and orderly end" to the jurisdiction of the European courts in Britain.

But so far, says The Economist, the UK's intransigent position represents a start break from the past. "The argument seems to be that Britain must rid itself of all traces of the EU like someone leaving an area of intense radiation needs a complete detox," says its Buttonwood column.

Flight risk

Theresa May's insistence that the UK must break all ties with the European Court of Justice "puts in jeopardy not only the nuclear industry but others covered by European regulatory bodies", says John Gapper of the Financial Times.

The airline industry has already warned that flights risk being grounded if the UK abruptly leaves the EU's Open Skies agreement, which allows EU airlines, including those registered in the UK, to operate from each other's airports.

Michael O'Leary, chief executive of Ryanair, told the European Parliament's transport and tourism committee: "There is a real prospect, and we need to deal with this, that there are going to be no flights between the UK and Europe for a period of weeks, months beyond March 2019.

"There is not going to be an interim agreement, there is not going to be a legal basis, we will be cancelling flights, we will be cancelling people's holidays for summer of 2019."

Unlike other sectors, aviation cannot fall back on World Trade Organisation rules if a deal isn't agreed, O'Leary added.

Switzerland has its own bilateral agreement with the EU, which could provide an alternative model for the UK, although "this again requires acceptance of EU aviation law, and the effective jurisdiction of the ECJ on aviation competition matters", says the Financial Times.

Anything to declare?

According to the National Audit Office, there is no guarantee the government's new customs system will be operational by the time of Brexit, "potentially complicating the country's future trade with the European Union", says Bloomberg.

The customs office calculates that in two years' time, there will be 255 million declarations per year based on current levels of trade with the EU, up from the current 55 million.

"Customs problems have obvious implications for the flow of goods in and out of the UK, so government as a whole needs to decide whether the extra cost and effort of getting a working system in place for day one is an insurance premium worth paying," the NAO's chief said.

Morse also told the Press Association it would be a "horror show" if officials had to manually process imports and exports.

Without any contingency plans, he continued, delays and problems could mean taxes at the border going uncollected, with queues of lorries and additional damage to business confidence and Britain's reputation as a trading nation.

In a worst-case scenario, it would become impossible to collect the £34bn of duty, excise, and VAT taken at the border every year.

Business as usual?

These warnings have prompted suggestions that the UK government will be forced into compromise.

On the question of nuclear materials, Davis has already suggested the UK might pursue some kind of association membership of Euratom, the European nuclear safety agency.

The government has gone further on the jurisdiction of the ECJ, suggesting the court could play a role in any transition arrangement. In the longer term, "arbitration mechanisms, like the agreement between the EU and Canada, are likely to be put in place", says Laura Kuenssberg of the BBC.

She adds: "With 27 other countries lined up against the UK government, and no overall majority in Parliament, a vague whiff of compromise might just be starting to circulate - because, in truth, they have no choice."

But a broader question is looming over Brexit – even if the country changes the rules on all these issues, will businesses take any notice?

"The evidence suggests that, whatever the UK does, large swaths of its economy will in effect be governed by EU regulation," says the FT.

Businesses have identified a "Brussels effect", the term based on the "California effect" long observed in domestic US regulation.

"Companies operating in several states or countries with different rules tend to adopt the toughest standards, particularly when they are needed to access a large and lucrative market like the EU, rather than run several separate compliance systems," adds the paper.

Anu Bradford, a law professor at Columbia University in New York, says: "The incentives for UK companies to continue to comply with EU regulation will be overwhelming.

"For all the talk of the EU economic model being in trouble, the Brussels effect is getting stronger."