The flaw in ‘no deal’ planning
Businesses wish the UK and EU could face reality and agree contingency measures now
If Britain crashes out of the EU next March without a deal, what would be the immediate impact on business? Most corporate leaders believe the implications would be pretty catastrophic. But a lot depends on what kind of “no deal” we have.
One possibility is that the UK and EU immediately descend into total acrimony, with huge disruption to air travel, freight transport and numerous economic sectors.
Alternatively, the immediate impact of no deal could be mitigated if the UK and EU were to draw up emergency plans in advance to ensure that planes keep flying and trucks keep moving — at least for a while.
Over the past few weeks, it has become increasingly clear that the UK government wants to get the EU to agree mini deals on the side to help mitigate the immediate damage if the Brexit talks collapse. But Britain does not seem to be getting very far.
Chris Grayling, UK transport secretary, recently wrote to EU member states asking them to engage with the British in side deals on aviation and haulage to allow key trade flows to continue if no Article 50 treaty were signed. But Mr Grayling was apparently rebuffed by the European Commission.
Whitehall’s latest batch of no-deal technical papers also shows how the UK hopes the EU will act helpfully on day one of a no-deal Brexit. One paper on road haulage, for example, expresses the hope that the EU will recognise UK-issued operator licences for truck drivers. But it admits this “cannot be guaranteed”.
Much of the responsibility for the failure to agree contingencies seems to lie with the EU. “Some on the EU side are quite dismissive of the mini-deals idea,” my colleague Alex Barker tells me from Brussels. “They say ‘no deal’ means ‘no deal.’ They will, of course, take contingency measures to manage disruption. But these would be unilateral and only in the EU interest. Discussing it with the Brits implies they would take action to help out the UK and that’s not on the cards.”
However, the UK is not exactly blameless in this whole affair either. On the one hand, the UK is asking Brussels for mini deals that help mitigate the damage of a disorderly Brexit. On the other hand, UK ministers are ramping up the pressure on Brussels by warning that, if no deal is signed, Britain will not pay the £39bn divorce settlement to the EU — at least on the agreed schedule. There is a lack of consistency there, to say the least.
Many businesses wish the UK and EU could face reality and agree some contingency measures now, in case we end up confronting the worst-case scenario.
“The commission should take the lead on this and find a way to work on mutual preparedness,” says Pauline Bastidon, head of European policy at the UK-based Freight Transport Association. “It doesn’t mean things will be OK after a no-deal. But it’s dangerous for both sides to go on as they are without putting in place any contingencies at all.”
That plea seems likely to fall on deaf ears. If we get to a no-deal outcome next March, relations between London and Brussels would have probably broken down pretty badly. It is not clear why the EU would want to help Britain out of a hole — whether it is before or after Brexit day.