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UK government prepares to spend £2bn on Brexit prep as no deal looms

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Spending plans: Britain’s Chancellor of the Exchequer Philip Hammond. Photo: OLI SCARFF/AFP/Getty Images

The UK government is preparing to spend up to £2bn on Brexit measures in the coming weeks as it looks increasingly likely that Britain will crash out of the EU without a deal on future trading arrangements.

UK chancellor Philip Hammond has set aside £2bn for potential spending on Brexit preparations and the prime minister’s spokesperson said on Monday this fund would be allocated “shortly.”

A spokesperson for the prime minister’s office told Yahoo Finance UK that the £2bn was for Brexit preparation generally, rather than specifically for a no-deal Brexit. However, the spending announcement comes as it looks increasingly likely that Britain will leave the EU without a deal.

Prime minister Theresa May was forced to pull a vote on her draft Brexit deal earlier this month in the face of widespread opposition from politicians across the political spectrum. Last week she went to Brussels to try and negotiate a better deal with EU leaders but was rebuffed.

A no-deal Brexit would mean that the UK has no agreement with the EU on things like trade, migration, and border control. Trade between the two parties would revert to World Trade Organisation (WTO) rules.

This is likely to cause huge disruption as it would dramatically increase paperwork and therefore the time taken to cross borders. There are concerns that the UK could face shortages of everything from car parts to food and medicine.

Members of the cabinet will set out plans for a so-called “managed no-deal” when ministers meet on Tuesday, according to press reports.  Plans reportedly drawn up include an option to rent boats to ship in emergency medicine and food supplies.