The UK’s Brexit team is under pressure to make provisions for a “no-deal” with the European Union. The negotiations are onerous and the EU is inflexible as ever, still demanding a guaranteed exit settlement sum. The latest SkyData poll discovers that 74% of people in UK—across all demographics, all ages and all regions—think a no Brexit deal is better than a bad deal; only 26% think any deal would be better than a no deal. Sources say that UK buys more from the EU than the EU buys from Britain, but no poll has been done in any of the 27 member states to gauge opinion on a no-deal scenario.
Pundits think that Brussels does not take a UK no-deal position seriously, but the Conservative government is prudently preparing for that eventuality. This week, separate trade and customs white papers paved the way for legislation to allow the UK to operate as a trading nation without disruption to current trading arrangements from 20 March 2019, the first day after the exit. The Department for International Trade paper established the guiding and practical principles that include: enabling the UK to maintain the benefits of the WTO Procurement Agreement; continuing support to developing economies by giving preferential access to UK markets; preparing to bring across into UK law existing trade agreements between EU and non-EU countries; creating a new, UK trade remedies investigating authority.
The Treasury’s Customs Bill white paper set out plans to legislate for standalone customs, VAT and excise regimes that, as far as possible, replicate the effect of existing EU customs laws with minimal disruption to businesses and travellers. The Customs Bill will give the UK the power to: charge customs duty on goods; define how goods will be classified, set and vary the rates of customs duty and any quotas; amend the VAT and excise regimes so that they can function effectively post-exit; set out the rules governing how HMRC will collect and enforce the taxes and duties owed; implement tax-related elements of the UK’s future trade policy.
What is not yet prepared for is how to exit from the jurisdiction of the European Court of Justice; terminating that control and implementing British sovereign law is inherent in the vote to leave the EU. Euro-sceptics will not accept a fudged or phased withdrawal. The status of 1.2 million British nationals living in EU countries and 3 million EU nationals in the UK is at stake.
Philip Hammond appears to be at odds with the Prime Minister. Theresa May claims the Chancellor has a budget of £250 million for a no-deal situation, but Hammond has said it will not be included in next month’s budget. Hammond is saving it till “the very last moment”, which might mean January 2018; pessimistically he said there was a “cloud of uncertainty” about the outcome of the negotiations.
After the fifth round of talks, the two Brexit Secretaries, Michel Barnier for EU and David Davies for UK, did not have anything other than a deadlock to report. Davis still hopes for a breakthrough at the EU summit on 19-20 October. Although Christine Lagarde of the IMF says it is unimaginable that UK would leave without agreeing to a deal, there are many who believe an agreement is not inevitable; contingency for a no-deal in all ministries and departments is the smart way to go.