Yahoo Finance Britain releases first batch of hard Brexit contingency plan
The UK government has just published the first batch of documents that tell British people, businesses, and other groups on how it’s planning for the possibility of Britain leaving the European Union without a deal.
The first round of papers come in at 24. The total of 84 technical notices are intended to explain how everyone, from the farmers and seafarers to the medical sector and financial services, will be affected by a no-deal Brexit, also known as a hard Brexit. Highlights include:
Credit card fees to rise
Consumers will not only face slower and more costly credit card payments when they buy EU products but UK expats should expect to lose access to their bank accounts in the event of a no-deal Brexit. That’s because banks in Britain will likely lose access to EU payments systems.
Brits living in the EU also face the possibility of losing access to their pension because they’ll struggle to access financial products related to pension income, such as insurance and annuities.
READ MORE: £160m ‘Brexit tax’: Holidaymakers and online shoppers face higher credit card fees
READ MORE: Britons in EU could lose access to UK bank accounts under no-deal Brexit
Red tape sparks border fears
A no-deal scenario is likely to lead to a tangle of red tape and cause delays at the border as well as cashflow disruption.
The government’s guidelines make it clear that companies trading with Europe would face new customs and excise rules and require paperwork covering customs and safety declarations in the event of no deal.
Josh Hardie, CBI deputy director general said the notices demonstrated no deal would “wreak havoc”.
“Those who claim crashing out of the EU on World Trade Organisation rules is acceptable live in a world of fantasy, where facts are not allowed to challenge ideology. By now few can be in any doubt that no deal would wreak havoc on economies across Europe,” he said.
Mike Cherry, chairman of the Federation of Small Businesses (FSB) National also warned, “the dangers of a sudden and unplanned no-deal Brexit have today been laid bare. The smallest firms will be the least able to cope with a cliff-edge moment.”
“It’s disappointing that we haven’t received a technical notice on what a no-deal outcome would mean for those applying for settled status. One in five small firms that employ staff have an EU citizen on their books. These workers are absolutely critical to the success of our economy beyond March 2019. We need a definitive unilateral commitment to the rights of EU citizens to stay in the UK after Brexit.”
READ MORE: Britain’s ‘no deal’ Brexit plans spell out trade disruption for firms
Medicines
Products will have to go through national assessment before they receive market authorisation to be sold in the UK. The Medicines and Healthcare products Regulatory Agency (MHRA), which regulates drugs in the UK, will take on the functions of the EU if an agreement is not reached by March 29, 2019.
Meanwhile, UK health secretary Matt Hancock published an open letter to NHS organisations about how drug companies will be asked to stockpile medicines. He added that hospitals, GPs, and patients will face investigation if they start stockpiling drugs themselves.
READ MORE: New drugs will need UK approval before reaching patients in no-deal Brexit
The UK’s secretary of state for exiting the European Union Dominic Raab said in a speech at the same time the papers dropped that while a good deal “80%” of the way there, “we have a duty, as a responsible government, to plan for every eventuality. These technical notices, and the ones that will follow, are a sensible, measured, and proportionate approach to minimising the impact of no deal on British firms, citizens, charities and public bodies.”
A European Commission spokesperson said: “We are working constructively to reach a deal. It is also clear that the withdrawal of the UK is going to lead to disruptions regardless, with a deal or without a deal. And that’s why everybody, in particular economic operators, needs to be prepared.”
READ MORE: Reaction to the British government’s ‘no deal’ Brexit plans
Meanwhile, Yahoo Finance UK has learned that Prime Minister Theresa May is set to travel to Brussels to address a group of leading MEPs as part of the government’s final push to secure a Brexit deal.
The visit has been agreed in principle and European Parliament and UK government officials are in talks to agree a date for May’s visit. The visit is important because the European Parliament has a veto on the final Brexit deal, which is being held up by disagreements over the future of trade and the Irish border, writes Luke James.
READ MORE: Theresa May set to address MEPs in final Brexit deal push
Is a no-deal Brexit likely?
Britain will leave the EU on 29 March, 2019, meaning there is less than eight months to go until a deal needs to be done. While the UK and EU have agreed that after this date there will be a transition period, lasting until 31 December, 2020, that slice of time will be used for an “orderly withdrawal” rather than an extension of negotiations. The idea that Brexit can be reversed has been floated a number of times, but it’s highly unlikely that would happen.
Talks have mostly stalled over the past year and a half with the former UK Brexit secretary only meeting the EU’s top negotiator Michel Barnier a handful of times. While newly installed Raab has at least met his EU counterpart as many times as his predecessor managed in 2018, he and others have warned about the possibility of a no-deal Brexit. Meanwhile, the 28-nation bloc has already produced 68 notices on “Brexit preparedness.”
Over the last two months, the UK government and other high-powered officials in Britain have all warned about how everyone should prepare for a no-deal Brexit, including Britain’s foreign secretary Jeremy Hunt. This comment came hot off the heels over the Bank of England governor Mark Carney and international trade secretary Liam Fox both separately saying that a no-deal Brexit is increasingly likely. Meanwhile a senior British regulator and the European Union warned banks and insurers about the same.
Britain’s leading opposition Labour says a no-deal Brexit would be “catastrophic” and a “complete failure by the government to negotiate for Britain.” Shadow Brexit secretary Keir Starmer said Raab’s speech was “thin on detail, thin on substance and provided no answers to how ministers intend to mitigate the serious consequences of leaving the EU without an agreement.”
Meanwhile, a number investment banking economists and strategists say that they don’t think the probability of hard Brexit has increased and it’s more likely that Britain will seal a deal at the last minute. Raab today also said the blame would lie with the EU in the “unlikely event” of no-deal Brexit “if the EU doesn’t match our ambition and pragmatism.”
However, Sonali Punhani, director of economics at Credit Suisse did warn that while a no-deal Brexit could be averted, it could “lead to a general election, second referendum or leadership change.” Meanwhile, a number of current and former politicians have said that a second referendum could trigger major social unrest.
