Britain, EU Accelerate Planning for ‘No-Deal Brexit’

The European Commission says it has started to implement plans for a no-deal Brexit — in preparation for Britain crashing out of the European Union without a withdrawal deal — which would dislocate manufacturers’ supply chains, disrupt air-travel, and gridlock busy seaports on both sides of the English Channel.

With just 100 days to go before Britain’s scheduled departure on March 29, the Conservative government of Theresa May is also accelerating arrangements for a chaotic “no-deal Brexit,” ordering all ministries to shelve non-essential business and to divert staff to focus on contingency planning.

Both the British government and Brussels are trying to offset the impact of a possible no-deal Brexit on business, as well as on their citizens, but acknowledge there will be severe disruption.  

The acceleration of “no-deal” planning in London and Brussels follows last week’s testy meeting between Theresa May and the leaders of the other 27 EU countries, in which May was firmly rebuffed in her bid to reopen negotiations on a withdrawal agreement.

The leaders held out little hope of offering any legal assurances that would help May sell the 585-page deal to unenthusiastic British lawmakers.  

Analysts said there is little evidence May will be able to squeeze anything out of the bloc that would substantially alter the political dynamic in London, where a majority of the House of Commons is opposed to May’s Brexit deal.

Long negotiated agreement

May’s deal, which was negotiated after almost two years of ill-tempered haggling between British and EU negotiators, tries to square the circle between Britons who want to remain in the EU, or closely tied to it, and Brexiters.

The proposed deal would see Britain locked in a customs union with the European Union for several years while it negotiates a more permanent, but vaguely defined, free trade settlement with its largest trading partner.  

In the temporary customs union, Britain would be unable to influence EU laws, regulations and product standards it would have to observe. It would not be able to implement free trade deals with non-EU countries.

The transition was reached to avoid customs checks on the border separating Northern Ireland and the Irish Republic, but British lawmakers fear Britain could be trapped indefinitely in the transition.

Britain’s main business groups Wednesday warned there is not sufficient time to plan for the repercussions of the country leaving without any withdrawal agreement and says hundreds of thousands of companies have not yet even started preparing for the consequences. 

“Businesses have been watching in horror as politicians have focused on factional disputes rather than practical steps that business needs,” said Britain’s Chambers of Commerce in a statement along with four other major employer groups.

Big disruptions 

The European Commission’s measures announced Wednesday are designed to limit disruption in several sectors, including finance, transport and data protection. “These measures will not — and cannot — mitigate the overall impact of a no-deal’ scenario,” it said in a statement.

“This is an exercise in damage limitation,” said European Commissioner Valdis Dombrovskis during a news conference. 

Unveiling 14 measures, he said a contingency plan had to be done “given the continued uncertainty in the UK.” The 14 measures aim to ensure some continuity for a temporary period, but the Commission has ruled out negotiating any bilateral agreements to replace the temporary measures.

They include allowing British-owned airlines to operate flights in and out of EU countries, but not between them, and recognizing for up to two years British financial-service regulations so British banks, investment houses and insurers can continue to sell their products in EU countries. And British haulers will be allowed to transport freight by road into the EU for a nine-month period without having to apply for special third-country permits. 

But there is no overall plan for what happens to an estimated 1.5 million Britons living and working in Europe. The commission is urging member states to adopt a “generous” approach to their residency rights, but only “provided that this approach is reciprocated” by London in how it handles three million EU citizens living in Britain. 

Britain’s decision to accelerate contingency planning was made during an ill-tempered three-hour Cabinet meeting Tuesday, in which ministers clashed over what to do if May fails next month, as still seems likely, to secure House of Commons approval for her exit deal.

The Cabinet is split between a faction that wants May to call a second Brexit referendum, another that wants Britain to negotiate another deal with Brussels, and a third group that says Britain shouldn’t worry about going it alone and breaking cleanly from the bloc.

Some Conservative lawmakers have warned they will quit the party if May moves towards a no-deal Brexit. Some lawmakers suspect the government is raising the stakes by planning for a no-deal Brexit in order to pressure the House of Commons to approve her withdrawal agreement. 

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