Biz will suffer, criminals could benefit from 'No deal' Brexit: UK watchdog

Companies will suffer and criminals could benefit from the inevitable border disruption that will ensue if Britain leaves the European Union without a deal, the country's public spending watchdog said on Wednesday.

With just five months to go to Brexit, Prime Minister Theresa May has yet to reach a deal with Brussels and both sides have stepped up preparations for the possibility there will not be one.

In its report, "The UK border: preparedness for EU exit", the National Audit Office (NAO) said there was not enough time to put fully effective border operations in place for a no-deal Brexit by March 29 and businesses would pay the price.

"Government has openly accepted the border will be sub-optimal if there is no deal," said NAO head Amyas Morse.

"It is not clear what sub-optimal means in practice, or how long this will last. But what is clear is that businesses and individuals who are reliant on the border running smoothly will pay the price."

The NAO said businesses did not have enough time to make the changes that would be needed if the UK leaves without a deal.

"Key ports and suppliers need reasonable certainty before making significant investments in infrastructure, people, systems or processes," it said.

The NAO also highlighted a security risk.

"Organised criminals and others are likely to be quick to exploit any perceived weaknesses or gaps in the enforcement regime," the report said.

"This, combined with the UK's potential loss of access to EU security, law enforcement and criminal justice tools, could create security weaknesses which the government would need to address urgently."

Brexit talks have stalled over a disagreement on the so-called Northern Irish backstop, an insurance policy to ensure there will be no return to a hard border on the island of Ireland if a future trading relationship is not agreed in time.

The NAO said planning for border operations in the event of a deal was less developed than that for no deal because of uncertainty over the future UK-EU relationship.

"Introducing new border arrangements as part of a deal could still involved a large amount of work leading up to and beyond the end of the implementation period in December 2020," it said.