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Brexit: No deal becomes even more likely

By electing Boris Johnson as their new leaders, the Conservatives have made a clear choice: the UK will leave the European Union on 31 October, with or without a deal. At least, that was Johnson’s commitment in the campaign.

To avoid a no-deal scenario, the European Commission therefore indicated this week that it is willing to discuss its position on Brexit with the UK over the coming weeks, but UK Prime Minister Johnson made it again clear that he has no intention of renegotiating the Withdrawal Agreement and therefore a no-deal Brexit seems to be his default plan. Senior EU diplomats confirmed that after exploratory talks between both parties, the UK does not have another plan and that it has no intention to negotiate. However, the official government stance is still that the UK is “ready and willing” to agree on the Brexit terms with the European Union. But the reality is that Johnson currently has no Brexit talks scheduled with European leaders. Furthermore, his unilateral condition is that the EU must first give up on the backstop insurance clause for the Irish border, something Brussels has long insisted as impossible.

Instead, the UK is increasing the preparations for a no-deal Brexit. The new government has announced an extra £2.1 billion of funding to prepare for such scenario. The extra budget will be used for more border force officers and upgrades to transport infrastructure at ports, easing traffic congestion and tackling queues created by delays at the borders, stockpiling medicines to ensure continued supplies and a national program to help businesses in their preparations.

By doubling the amount of money the government has set aside this year, it seems more and more plausible that the UK government is preparing itself for a no-deal scenario. Chancellor Sajid Javid said: “This additional £2.1bn will ensure we are ready to leave on 31 October, deal or no-deal.” In addition, Javid has ordered HM Revenue & Customs (HMRC) to make preparations for a no-deal Brexit on 31 October its absolute top priority. Consequently, HMRC needs to give weekly delivery focused updates to check that preparations are being put in place and to ensure exports are not held up at the border after 31 October. In addition, Javid instructed to put in place the necessary technology and transit infrastructure to cope with a completely new customs regime for EU trade and to recruit the extra staff needed to deal with the increased number of customs declarations.

On the side of the EU, big businesses are preparing themselves for a no-deal scenario by hiring consultants, shifting headquarters, preparing alternate transport methods, etc.. Governments also aim to increase Brexit awareness among smaller and mid-size enterprises amongst growing doubts about the EU’s readiness for a no-deal Brexit. An example is the Eurotunnel, connecting UK and France (and the EU). About 30% of all cargo crossing the tunnel under the English Channel is expected to face customs and veterinary checks or be held up because shippers have not pre-registered them. But also delays due to missing paperwork can upend supply chains. Roughly 32 km of additional queues are expected for each extra minute a truck spends at customs in Dover.

 

What’s next?

The UK Parliament will return on 3 September from summer recess. Together with the organization of the Labour and Conservative Party conferences this will surely increase again the debate between Remain or Leave on whether to leave with or without a deal, this with less than 2 months to go.