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 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.
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.
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.