No deal means reverting to trade on World Trade Organisation terms. As Open Britain, another think-tank, notes, this implies not just all of the EU’s non-tariff barriers, but tariffs of 10% on cars, 15% on food and 36% on dairy products. It would end Britain’s access to the EU’s trade deals with 53 other countries. Last year the Treasury said this option would reduce GDP by 7.5% after 15 years.
A race against time: The two-year countdown to Brexit has begun | The Economist
On the EU side there is another calculation: it will be easier to ensure unity among the 27 member states on the terms of the divorce, rather than on trade, when different national interests could come into play. Preserving unity is a fundamental concern and Mr Tusk insisted that the EU "will act as one". By insisting that the principles of the divorce bill be settled first, the leaders of the 27 are also stopping Mrs May using payments as a bargaining chip over the future trading relationship.
UK faces tough divorce from the EU - BBC News
For the EU there are four priorities in the talks: settling the divorce bill which some in Brussels have estimated at €60bn (£50bn), establishing the future status of EU citizens living in the UK, keeping open Northern Ireland's borders and agreeing which laws companies will operate under post-Brexit.