11 December 2018

With just over 14 weeks to go until the UK leaves the EU, it will not be possible to ‘manage away' all the potential disruption of a no deal Brexit, says Tim Durrant.

Leaving the European Union with no deal would mean an overnight change in the UK’s relationship with the rest of the world. There are fears of lorry queues in southern England and northern France. There is also a lack of certainty for EU citizens living in the UK and British people living in the other 27 EU members. And UK businesses would find it harder to sell their products and services in the EU.

Despite this, some are arguing that a ‘managed no deal’, where the Government works to mitigate the worst impacts of such an exit, is preferable to the Prime Minister’s deal. But the option they are describing is not in the Government’s gift.

Former Cabinet minister Esther McVey told Sky last week that even if the UK leaves the EU with no deal, there will still be an ‘implementation period’ to smooth our departure. This is, quite simply, wrong. The implementation period, or transition, is a key component of the Withdrawal Agreement – and that is the deal that McVey and colleagues are suggesting the UK reject.

The Government has a long ‘to do’ list to manage no deal

The Government has set out its plans for preparing for no deal – but knowing what needs to be done is very different from doing it. Government departments and agencies need to build new IT systems, protect the rights of EU citizens living here, and negotiate agreements with non-EU countries to replace those that fall away when we are no longer a member state.

On the legislative front, the Government needs to pass at least three bills before a no deal exit, covering fisheries, financial services and trade with non-EU countries – the trade bill was introduced to Parliament in October 2017 but has disappeared (again) after second reading in the Lords in September 2018.

The Government also needs to pass around 700 pieces of ‘secondary legislation’ – they have so far introduced around a third of this total.  

Much of the work for no deal falls to business

HM Revenue and Customs (HMRC) have been writing to businesses that currently trade only with the EU to set out what they might need to do to prepare for no deal. HMRC have admitted that there are around 100,000 businesses who they know will face challenges in the case of no deal but who aren’t currently registered with HMRC and therefore hard to contact.

A survey of businesses in November 2018 estimated that 80% of actions that businesses need to take to prepare for no deal are yet to be completed, not least as companies are reluctant to spend time and money on an outcome that may not materialise – a particular issue for small companies.

The UK is also reliant on the EU to manage no deal  

Much of the current plan for managing a no deal Brexit relies on striking ‘side deals’ with the EU to mitigate the worst impacts – as we have pointed out previously, World Trade Organization (WTO) terms offers little mitigation of the problems of no deal.  

But Michel Barnier has told MPs that “if there is no deal, there is no more discussion”, but that it would consider introducing “unilateral contingency measures”.

On flights, for example, the Commission has said that it will unilaterally allow UK flights to continue to the EU, if the UK reciprocates. Such an arrangement would not allow UK airlines to continue flying within the EU – hence Easyjet’s decision to set up a company in Austria.

The UK also needs the EU’s help to protect the rights of its citizens living in the other 27 member states – without a deal, they are dependent on each country to legislate to ensure their legal status is unchanged. There is no reason to expect EU governments not to do so, but British citizens face uncertainty in the meantime.

With so much to resolve ahead of a no deal Brexit, much of which relies on the goodwill of the EU, those calling for the UK to take this route need to be honest about what it would mean.

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Comments

Is it accurate to say that the implementation of a 'no deal' Brexit would automatically imply that a 'hard border' would be implemented between Northern Island & the Republic? If so why is this never referred to by the No deal Brexiteers or are they keeping quiet about it in order to call the bluff of the EU who would, presumably, be the ones who would be obliged to implement it as we would, presumably, be prepared to continue allowing free access of goods from the EU across the border?

If UK throws open its NI border with the EU post Brexit, then under MFN it should also do so for all its borders, with all its trading partners! Lots to lose there.

All good stuff, but all a bit remote if you're living a long way from Dover, with no plans to holiday abroad, no relatives living on the Continent, and no neighbours or colleagues who are EU27 citizens. What difference would "No Deal" make to them?

Assuming they don't eat imported food, take medicine, rely upon rapidly devalued money or benefit from services delivered by EU27 nationals, they'll be fine... If of course their neighbours do, then they might want to consider if that would cause unrest

when you live near the factory that has just closed sacked all the staff and your mortgage interest has just shot up 10% i hope they all say well this is what I voted for

They buy things from shops. So food won't get through. Heard it said Scotland will have empty shelves first.

RE: Chris Johns comment. It would seem a strange approach to "take control of our borders" and stop the free movement of EU citizens into the UK to then feel relaxed about EU citizens and non-UK goods crossing into the UK across its only land border.

Would it be possible for the UK to revoke Article 50 for an unspecified period with the intention of providing sufficient time to make adequate provisions for a no deal Brexit and the trigger it again at the time of our choosing i.e. when we are fully prepared?