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Explainer

No-deal Brexit: UK preparations

The UK’s no-deal readiness is about more than just government – it means public bodies, individuals, and above all businesses taking action to prepare

The information in this explainer details the situation at the time of publication and does not reflect possible recent developments.

What is the UK doing to get ready for no deal on its future relationship with the EU?

Preparations for a no-deal exit have been taking place since the EU referendum in 2016. The government ramped up its preparations in summer 2018, when it started publishing a series of ‘technical notices’ on how public bodies, businesses and individuals needed to prepare for no deal. Since then, the government has prepared for the possibility of leaving the EU without a deal four times  – ahead of 29 March 2019, 12 April 2019, 31 October 2019 and 31 January 2020.

Although the UK has now technically left the EU, the government needs to prepare for the end of the transition period when the UK will leave the single market and customs union, with or without a deal. This means that many – but not all – no-deal preparations will also be needed if a deal is agreed. Read our explainer on the key differences in a deal or no deal scenario.

The UK’s no-deal readiness is about more than just government – it means public bodies, individuals, and above all businesses taking action to prepare. To drive readiness for the end of the transition period, the UK government has launched a new 'Check, Change, Go' Brexit communications campaign.

The EU’s preparations are another critical factor in determining how ready the two sides are for no deal.

How does no deal at the end of the transition period differ to no deal in 2019?

In many areas – including the GB–EU border, agriculture, health, data, fisheries, transport, services, energy, law and justice, competition and international agreements – no deal on 31 December 2020 is identical to no deal in 2019.

There are some key differences, however. The Northern Ireland protocol, agreed as part of the Withdrawal Agreement, ensures that there will be no hard border on the island of Ireland. It removed the need for checks on goods moving between Northern Ireland and the Republic of Ireland (as Northern Ireland would continue to follow EU rules in many of these areas) – instead, checks will take place in the Irish sea on goods going from Great Britain to Northern Ireland from 1 January.

The Withdrawal Agreement means the rights of EU citizens living in the UK (and vice versa) before the end of the transition period are protected. There are also certain provisions to limit some of the cliff-edge change – for example, goods placed on the UK or EU market before the end of the transition period can continue to their destination and certain elements of policing and judicial co-operation can be wound down in a more orderly way.

The government passed the EU Withdrawal Act in 2018, which is necessary to repeal the European Communities Act 1972 and copy EU law into UK law after Brexit to ensure continuity. But it also used the powers in the Act to pass hundreds of statutory instruments. Many of these are uncontroversial, as they simply remove references to EU institutions and other aspects of membership.

The government needs to pass several bills to manage the domestic impact of no deal.

What steps has the government taken to prepare for no deal on the future relationship?

Issue

Challenge

Progress to date

The GB–EU border Ensuring that goods can continue to flow across the Great Britain border (particularly at Dover)

The UK government has published its ‘Border Operating Model’ outlining how the GB–EU border will work after the transition period. New checks will be phased in over a six-month period, to allow more time for business and government to prepare. It also plans to launch a new ‘Check an HGV is ready to cross the border’ service (formerly Smart Freight) to minimise disruption by ensuring that hauliers have the correct paperwork before they reach the border. Hauliers with the correct paperwork will be issued with a Kent Access Permit (KAP) and those who enter Kent without the correct paperwork or make a false declaration to receive a KAP could be stopped and fined up to £300.

This will form part of the revived Operation Brock, the governments traffic management system introduced ahead of a no deal last year. Other contingency plans – such as Operation Capstone, which tests the governments worst case scenario – are also being tested.

Existing IT systems need to be upgraded and new ones built. Most are ready but hauliers using GVMS, critical for facilitating customs checks at the main Channel ports, were only able to get the necessary Goods Movement Reference from 23 December.

From January, the EU will check imports from the UK as it would imports from any other non-member, putting major burdens on businesses.

HM Revenue and Customs has been communicating with businesses about the new customs processes they will need to follow if there is no deal on the UK–EU future relationship. But many businesses are still unaware of the changes they will face.

Northern Ireland Ensuring the flow of goods between Great Britain and Northern Ireland

The UK government has established two schemes to help businesses moving goods across the Irish Sea comply with new requirements under the Northern Ireland protocol and minimise disruption. The Trader Support Service (TSS) will help with new customs processes and the Movement Assistance Scheme (MAS) to assist with new agri-food paperwork and cover ‘reasonable costs’. However, the latter was only announced mid-December and both will face a challenges scaling up capacity to meet demand.

The UK–EU Joint Committee have also agreed a ‘grace periods’ of three months from agri-food paperwork for supermarkets and six months to allow certain foods restricted under EU law, such as sausages, to continue to be traded GB-NI. 

The UK government is also working to establish the UK Trader Scheme – announced in December - which by UK-EU agreement will be used to certify goods ‘not at risk’. This will become more important in the absence of a zero-tariff UK–EU agreement where there will be a greater incentive for traders to try to move goods from GB–NI to avoid EU tariffs.
Citizens and migration

Protecting the rights of EU citizens in the UK and UK citizens in the EU

Establishing a new migration regime

EU citizens whose rights are protected under the Withdrawal Agreement must apply to the Home Office in order to secure their status. By October 2020, over four million had already done so.

EU citizens arriving in the UK after the 31 December 2020 deadline will be subject to the UK’s immigration rules.

The government has set out the new immigration regime and the steps businesses need to take in order to hire from outside the UK after 2020, which include paying to register as a via sponsor with the Home Office. Many businesses are unaware of the steps they will need to take in order to hire from outside the UK after 2020.

Agriculture, fisheries and food Maintaining food supplies and establishing new UK regulatory regimes

UK exporters would need to get approval before being able to export any product of animal or plant origin to the EU. After that, they will face greater checks than now and will have to pass through a border inspection post, with 50% of trade requiring physical inspection by a vet.

There will also be problems exporting animal products to other countries if current EU agreements have not been replaced. The UK has said it will replace EU funding for farmers until the end of the current payment cycle.

There is no clarity over the UK’s approach to fishing quotas after Brexit.

Health Maintaining medical supply chains

The EU has said that UK companies will need to re-register their medical products in the EU to continue to sell them in the single market.

The government has asked pharmaceutical companies to build “buffer stocks” of key items and consider alternative supply routes to deal with any interruption to supply. It also plans to secure additional freight capacity for shipping medical goods to the UK (as it did in ahead of a possible no deal in 2019). However, it does not currently plan to purchase warehouse space, as it did last year.

The government has acknowledged the additional pressures placed on the medicines sector and supply chains by the coronavirus crisis.

The Pfizer/BioNTech coronavirus vaccine is manufactured in Belgium. The government has outlined its contingency plans for the distribution of the vaccine in the event of border disruption, with military planes on standby if needed.

Transport Creating new databases, new infrastructure and ensuring cross-border travel continues uninterrupted

Increased border checks at EU ports will potentially cause traffic delays in Kent. The government plans to revive 'Operation Brock' to manage such disruption.

UK hauliers and coach companies will no longer be able to serve the EU market.

Flights to the EU and many other countries around the world are governed by EU agreements, which the UK is working to renegotiate on its own behalf. The government expects to have all these aviation agreements in place.

The EU has proposed targeted contingency measures for the event of a no-deal exit to maintain basic air connectivity, basic road connectivity, and aviation safety. These will be possible if reciprocated and would last six months.

Services Preparing for changes to regulatory regimes and terms of access to the EU market

The UK government committed to unilateral actions to minimise financial disruption in a no-deal scenario in October 2019, including a temporary permissions regime allowing EU financial services firms to continue operating in the UK for a limited period while seeking UK authorisation. This regime will be repeated at the end of the transition period. The UK government has also given UK financial services regulators temporary transitional power (TTP) which allows them to delay the application, or otherwise modify, firms’ regulatory obligations where they have changed as a result of the ‘onshoring’ of regulation.

In 2019, the EU committed to a similar temporary permissions regime for some key financial services sectors, for a very short time, on a unilateral basis. It is not clear if this will be repeated this year. Similar steps have been taken in preparation for the end of the transition period.

For non-financial services like telecoms and broadcasting, firms may need to re-register their services in an EEA country.

Energy and environment Creating a new nuclear safeguards regime, replacing other functions currently carried out by EU agencies

The UK regulator will take over some EU functions and is in the process of procuring a new IT system, training new inspectors and has secured funding for its increased role.

The UK has promised a new environmental watchdog – the Office of Environmental Protection (OEP) – to replace EU functions, although it will not be legally established before the end of the transition period and the chair was only announced in December 2020. The environment secretary has said that the Interim Environmental Governance Secretariat will operate within the Department for Environment, Food and Rural Affairs until the OEP is legally established.

Data Securing an “adequacy” decision to allow data flows to continue

If the EU does not deem the UK’s data protection regime adequate, it will be more difficult for organisations inside the EU to send personal data to the UK after a no-deal Brexit. Instead, they would have to fall back on more costly and cumbersome alternatives.

The UK will allow data to be transferred from the UK to the EU in a no deal.

 

Competition Beefing up the Competition and Markets Authority The Competition and Markets Authority is expanding to handle an increase in the volume and complexity of its cases, as it takes on the responsibilities of the European Commission in monitoring state aid and other competition policy in the UK.
Law and justice Finding replacements for EU tools allowing cooperation in law enforcement

The UK cannot recreate the EU’s existing co-operation mechanisms on its own: it will have to rely on outdated or less secure methods to work with EU counterparts, as the EU’s tools are only for member states or countries with special agreements.

Sajid Javid, former Home Secretary, wrote to his counterparts in February 2019 asking for contingencies to be in place – there has been no move from the EU to agree these.

International agreements Replacing the UK’s access to the EU’s agreements with countries around the world

The government has ‘rolled over’ 29 out of 38 EU trade agreements with a number of countries, including Switzerland, Chile and Israel, and signed a new free trade agreement with Japan. It has also struck agreements on aviation services with a number of key countries, including the US, Canada and Brazil, and nuclear agreements with partners including Australia and Canada.

However, we do not know what, if any, concessions the government is having to make to other countries to secure these rolled-over agreements. 


 

Topic
Brexit

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