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Debates

The UK and Europe

The UK has a lot to do to be ready for a no deal Brexit

Adela Iacobov / Oct 2018

Image: Shutterstock

 

With a looming deadline for reaching an agreement with the EU, the Prime Minister has assured that while it would not be the Government’s preferred option, the UK is prepared to leave in March 2019 without an agreement in place, since “no deal is better than a bad deal”. The Government’s technical notices, published to set out how government bodies, businesses and individuals would need to prepare for this scenario, state that both sides want a deal, but the UK will be ready to leave without one if required.

However, with just over five months to go, Institute for Government analysis shows that only one out of the 105 technical notices (Geo-blocking of online content) indicates no further action is required. The rest, published between August and October 2018, describe a wide range of outstanding actions needed to prepare for a no deal scenario in every sector, from nuclear research to buying and selling timber. As the British Chambers of Commerce’s Adam Marshall said, the notices vary from “the crystal clear to the maddeningly obtuse”, with 83 of them specifying further engagement is required from government on the topic and 10 of them recommending businesses and citizens seek professional advice on issues like handling civil legal cases or trading with the EU.

In spite of the fact that the EU’s chief Brexit negotiator, Michel Barnier, ruled out any ‘mini-deals’, saying ‘if there is a no deal there is no more discussion’, over a quarter of the notices state that the Government hopes to strike some kind of sectoral,“bare bones” agreement, either with the EU or with individual member states, to mitigate the worst impacts of a no deal exit, particularly in transport-related areas like flights and road haulage. On top of that, the Government is also either intending to join or is in the process of joining hundreds of international agreements, most of which the UK is currently part of through its membership of the EU.

It is not just a big negotiation and implementation task: Government needs to pass or amend legislation for nearly half of the areas covered by its notices before March 2019. Despite the Leader of the Commons, Andrea Leadsom’s assurance that the Government does not expect any difficulty in passing the required legislation by exit day, it has a lot to do. Of the estimated 800 to 1,000 Statutory Instruments needed under the EU Withdrawal Act to correct the UK’s statute book, fewer than 100 have so far been laid before Parliament.

Over half the notices also set out new processes or systems that the Government must establish in order to take over tasks currently carried out by EU bodies. At least 25 of these will require new IT systems of varying complexity, from creating an e-notification service for public sector contract opportunities in the UK to finalising HMRC’s new IT system for customs declarations, all of which would need to be ready by March 2019.

Business will then need to adapt to using these new processes and systems and complying with the new British red tape, as well as dealing with the additional EU bureaucracy if they intend to trade with the EU, which could be challenging, disruptive and costly, particularly for SMEs.

Over a third of the UK technical notices – 46- mention business will have to go through a different UK process to operate in the UK, while 48 confirm UK firms will have to seek new licences and approvals from EU bodies to place products from chemicals to fish on the EU market. 15 of them suggest that establishing some form of presence in the EU will be necessary in order to maintain Single Market access.

On the other hand, 50 of the 105 UK notices confirm the UK will unilaterally recognise EU standards and licences, from product authorisations in goods categories from medical devices to plants, to data protection and aviation safety standards, at least temporarily. By allowing EU businesses in some sectors to thus retain full access to the UK market without reciprocation, the Government aims to mitigate disruption after exit day. However, considering the burdens UK businesses will face to continue trading with the EU, the difficulty will be making this asymmetry between the UK and EU approaches politically palatable.

While the technical notices are helpful for mapping out what would happen across many sectors if the UK left the EU without a deal, they mostly set out a long and complex list of outstanding actions the Government and business still need to take or finalise in order to prepare for this scenario. Going through the entire series, it is clear there is a lot left to do in the next five months, and the guidance for business remains uncertain on when exactly these directions need to be turned into action to ensure preparations are in place by March 2019.

 

Adela Iacobov

Adela Iacobov

October 2018

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