BUSINESSES and pensioners could be among those hardest hit by a no-deal Brexit, Westminster’s Scottish Affairs Committee was told yesterday.

Financial experts told MPs that failure to reach a withdrawal agreement could impact on trillions of pounds of financial contracts between the UK and the EU. At worst, some businesses would be unable to continue. A no-deal Brexit could also make it illegal to pay out some pensions.

The committee was taking evidence in Edinburgh from a range of experts on the impact of leaving the EU on trade and investment. Committee chairman Pete Wishart asked: “In the event of a no deal, what would happen to the continuity of cross-border financial contracts between the UK and EU, and what would this mean for firms and consumers?”

Conor Lawlor, of UK Finance, the trade association for the finance and banking industry, said: “There is about

$27 trillion to $29trn

(£20-22trn worth of contracts agreed between the UK and the rest of the European Union. If the UK is unplugged from the European Union overnight ... a lot of those contracts don’t fall away, they’re still fundamentally based on commercial or corporate law. In the best-case scenario it means increased costs, in worst-case scenario

it means the business can’t function.”

Meanwhile, the UK Government announced an independent review of how farm funding is distributed across

the UK following Brexit.

An independent advisory panel will look at how subsidies are handed out to England, Scotland, Wales and Northern Ireland from the UK’s exit from the EU until 2022 to ensure they are “fairly split”.

The UK Government confirmed it will not use the Barnett formula alone as a basis for distributing farm funds. Environment Secretary Michael Gove said the review will consider each country’s circumstances, including environmental, agricultural

and socio-economic factors, such as farm numbers

and sizes.