No-deal scenarios on Brexit

Manal Lotfy , Saturday 28 Jul 2018

Time is running out for the UK and the EU to reach agreement on Britain’s exiting the EU, writes Manal Lotfy in London

Theresa May
Picture taken on July 24, 2018 for Britain's Prime Minister Theresa May (Reuters)

Civil unrest, food and medicine shortages, a state of emergency and sore relationships between British and Europeans for a generation – these are only a few of the warnings that have emerged from UK officials and business leaders if the Brexit talks between the UK and the EU collapse.

However, it is not all doom and gloom. For many in the “hard Brexit” camp, life is rosy. No deal, no problem, they say, adding that Britain will thrive despite the challenge of a no-deal scenario.

Time is running out for the UK and the EU to reach a deal on what will happen when the UK crashes out of the EU on 29 March 2019 if there is no agreement.

British Prime Minister Theresa May’s earlier Brexit plans led to civil war in the ruling Conservative Party and the resignation of both Brexit Secretary David Davis and Foreign Secretary Boris Johnson, together with more than eight junior ministers and Conservative MPs.

May’s plans outline an unprecedented customs system under which the UK would collect EU duties while having the freedom to set different tariffs on goods destined for the British market.

The EU response to her complicated and untried plans was swift. EU Chief Brexit Negotiator Michel Barnier said the “facilitated customs arrangement” raised practical, legal, economic and budgetary questions.

New British Brexit Secretary Dominic Raab has accused the EU of acting “irresponsibly” and of trying to ramp up pressure on the UK with projections of what the outcome of the UK crashing out of the EU without an agreement could be. He said the UK was serious about the possibility of a no-deal walk-away from the EU.

With little room for manoeuvre, May and her cabinet then started a “summer on tour” in Europe and Britain to sell the plans.

New Foreign Secretary Jeremy Hunt warned during talks in Germany this week that without a “change in approach from the EU negotiators” there was now a “very real risk of a Brexit no deal by accident.”

“Britain would find that challenging, but in the end we would find a way not just to survive but to thrive economically,” he said. He added that “many” in the EU believed they just had to “wait long enough and Britain will blink,” but “that’s not going to happen.”

He also warned the EU that failing to compromise would poison relations for a generation, emphasising that Britons would blame Brussels for a chaotic Brexit. Only Russian President Vladimir Putin would celebrate a no-deal Brexit, he said, as the fallout would seriously weaken Western ties.

Hunt’s warning of geopolitical consequences and sore relations for a generation between the British and the EU was less dramatic than other warnings over the past few days.

Doug Gurr, head of Amazon in the UK, warned of “civil unrest” within two weeks if Britain left the EU with no Brexit deal. He made the comments to business leaders during a meeting with Raab, insisting that this was a worst-case outcome which formed part of his contingency planning.

Dominic Grieve, a former attorney-general and senior Conservative MP, warned that the UK would be “in a state of emergency” with a “no-deal” Brexit. He warned that Britain leaving the EU without a deal would be “absolutely catastrophic.”

“We’ve got to be realistic about this. We will be in a state of emergency. Basic services that we take for granted might not be available. It wouldn’t be possible, for example, for someone to fly to Rome because the overflying rights over the other countries of the EU are regulated by EU law. We wouldn’t get medicines in. We’d be out of the Medicines Agency. And there’d be difficulties bringing food into this country because of the number of regulatory checks that would take place,” he said.

With warnings from right, left and centre, and the government’s refusal to deny stockpiling plans for foods and medicine, it is not difficult to see why many Remainers are still hopeful that a lack of progress and the threat of a “no-deal” scenario could kill off Brexit altogether.

They want to see a second EU referendum to end the stalemate in the country, and surprisingly there is increasing appetite for this in the Conservative Party.

Grieve said a second EU referendum on Britain’s membership of the EU “may be the only solution” even though it would not be “ideal”.

Former Prime Minister John Major also backed a fresh Brexit vote. “It has downsides. It has difficulties. But is it morally justified? I think it is,” he said. Even though the opposition Labour Party opposes in principle a second referendum, shadow Finance Minister John McDonnell did not rule out backing it.

“We’ve not ruled anything out, but our preference is a general election because then you discuss the issues, not just Brexit but other issues,” he said.

No deal would lead to an absence of the transition period May has negotiated with the EU to protect the UK from an abrupt cliff-edge Brexit.

According to the transition period, the UK would continue to follow EU rules for just under two years after it leaves the EU in March 2019 to allow time for new post-Brexit arrangements to be put in place.

Should there be no deal, Raab has vowed the UK will not pay the £39 billion “divorce” package requested by the EU. “Article 50 requires, as we negotiate the withdrawal agreement, that there’s a future framework for our new relationship going forward, so the two are linked,” Raab said.

If there is no deal in March 2019, the UK would immediately have control over its borders, and UK nationals would likely lose the right to work in the EU.

There would be legal uncertainty for the 1.3 million Britons living in the EU and the 3.7 million EU nationals in the UK.

Raab appeared to confirm that the government was planning a lorry park in southeast England should severe tailbacks occur due to post-Brexit delays at the Port of Dover because of the need for customs and regulatory checks in the case of no deal.

Northern Ireland would be outside the EU, with no arrangements on how to manage 300 crossing points on the 310-mile border with the Republic of Ireland, which is inside the EU.

The prices of consumer goods would likely increase significantly, especially food coming from the EU. Raab refused to be drawn on claims that the government has been stockpiling food and medicines. However, he insisted that “any responsible government” would be planning for all possible outcomes. 

In the case of a cliff-edge Brexit, the UK would trade with the EU under World Trade Organisation (WTO) rules, which mean there would be immediate customs and regulatory checks and the UK and EU would have to pay tariffs on each other’s goods.

The effects on the City of London and the service economy would be as severe. Many firms have made contingency plans for no deal, but the real fear is that many finance and insurance companies would choose to leave the UK for European cities.

*A version of this article appears in print in the 26 July 2018 edition of Al-Ahram Weekly under the headline: No-deal scenarios on Brexit 

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