I'm expecting most EU countries wanting avoid as many job losses as possible.
Doesn't really matter who's got the most leverage. The optimum strategy for both is low/no tarrifs
It's the loss of things like financial services companies based in London being able to readily "passport" their services into other EU countries without relying on local branch offices somewhere in the EU that will really hurt.
When it comes to passporting rights, it's very much in the interests of the EU to tell the UK to bugger off, and let the London HQs relocate a whole bunch of jobs to Frankfurt or Paris or Tallinn if they want to carry on doing business with EU nationals. This is likely bad if you work in some London-based back office role for a big European bank; really bad if you're a London-based fintech startup aiming to serve most European markets.
The city may lose up to 30% (google Euro clearing and ECB. I was always a big issue). It will move to Luxembourg, Frankfurt, Paris and Dublin. Possibly Scotland if Scotland decides to secede - a vague possibility.
Since it is clear that the optimal economic outcome is not being selected, the optimal Political outcome will win.
EDIT: to elaborate on what I mean. I think that this event has more to do with political points being earned, and poor leadership than it has to do with actual good economic sense.
In such an arena, most of what the HN crowd tends to be focused is less applicable.
What I expect to happen is that life will continue as normal. Any premium which was built into the Pound due to reduced transaction costs with the EU will be priced in very quickly.
What matters is what penalties the EU decides to apply on the UK, in order to set a precedent. I expect the precedent to be onerous - sufficient for the UK to pay with its larger economy, but much harder to cover for any smaller state planning to leave.
Unfortunately this is the worst kind of conjecture - guesswork by someone not currently in the market.
De Gaulle certainly was right in vetoing the UK application repeatedly, given how much harm they have done to the common European project and long-time peace and prosperity on the continent.
I've heard that all EU laws will remain in place unless explicitly removed
It's a bit more complicated though.
In fact, nothing stops the UK following the EU laws that it wants to afterwards as well.