Market Watch: The UK faces a 'hard Brexit' chaos

The stakes are rising for the UK's economy with less the six months until its self imposed Brexit deadline.

The prospect of economic chaos looms if a deal can't be reached with the EU, says Pie Funds chief executive Mike Taylor, who has just returned from the UK, although there is a range of other possible scenarios.

If, as renegade Conservative Party MP Boris Johnson and others have advocated, the UK decides to leave on its own terms, without paying a settlement, then the Europeans would not be happy, Taylor said.

"We could have a scenario where there is chaos at the airports and the ports. If you think about food and the coming into Europe. If that food can't make it through because of disputes about tariffs then we could have chaos."

The no-deal or "hard Brexit' option was essentially a game of brinkmanship, he said.

If a soft-Brexit deal is done then I think there will a sense of relief in markets and the UK [economy] will probably do quite well," he said. "If there is a hard Brexit scenario then it will be quite damaging. Although probably only for a short period of time, maybe one to two years, and then we'd expect the UK to recover."

"The pound would crash, there would be chaos and disruption it might cause a short term recession but ultimately we'd expect the UK to bounce back."

Taylor said he wouldn't be surprised to see the uncertainty continue right through to the end of the year - even though there was an expectation that the British would go back to Europe with a firm plan later this month.

One of the big issues for the UK was that the whole issue seemed to have become locked up in the internal political struggles of the two major parties.

Political conflicts have raised the possibility of a second referendum (more likely to be a choice about the type of deal rather than new yes/no vote).

There was also a risk that Prime Minister Theresa May loses the confidence of her party and faces a leadership challenge from a hard Brexiteer like Johnson.

That could spark a fresh general election.

"The experience I got was that average man and woman in the street was over Brexit," Taylor said. "They just want to get on with their lives."

It had been a significant distraction from other problems and issues for the past two years even though it hadn't yet had a significant economic impact.