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Planning for a no-deal Brexit

Published Tuesday, November 5, 2019

After Boris Johnson became Prime Minister in July 2019 the Government intensified planning for a no-deal Brexit and stressed its intention to take the UK out of the EU on 31 October with or without a deal. But the UK remained in the EU after 31 October after a further extension of the Article 50 period was agreed with the EU. A no-deal Brexit however remains the default outcome if an agreement is not ratified. This briefing paper provides an overview of Government and EU preparations for a no-deal Brexit, and of recent reports analysing the possible impact of this outcome

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Brexit developments: The Johnson Government

After becoming Prime Minister in July 2019, Boris Johnson stepped up preparations for the UK to leave the EU without a deal on 31 October. However, he said his preference was for a deal. MPs concerned about the prospect of a no-deal Brexit worked together to pass the ‘Benn Act’ in early September, which would prevent the Prime Minister taking the UK out of the EU without a deal on 31 October unless this had the consent of the House of Commons. Following the passage of the Act, the Government continued to insist that the UK would leave the EU on 31 October.

The UK and EU reached agreement on a revised Withdrawal Agreement and Political Declaration on the future EU-UK relationship on 17 October, but in a special sitting on 19 October the House of Commons withheld approval for the revised texts. The Prime Minister then sent a letter to the EU requesting an extension of the Article 50 period until 31 January 2020, in accordance with his obligations under the Benn Act. The Government pressed ahead with its attempts to ratify the revised Withdrawal Agreement, introducing the European Union (Withdrawal Agreement) Bill. Although MPs approved the Bill’s second reading on 22 October, defeat of the Government’s programme motion aimed at completing ratification by 31 October led to the legislation being paused. The Government then said it was intensifying its planning for a no-deal Brexit on 31 October.

On 28 October, the EU said it had agreed to the UK’s request to extend Article 50 until 31 January 2020. The Government suspended its planning for an imminent no-deal Brexit.

In the absence of UK and EU ratification of a withdrawal agreement, a no-deal Brexit remains the default scenario unless the UK revokes the Article 50 notice.

No-deal planning under Theresa May’s Government

Theresa May’s Government stepped up planning for a no-deal Brexit in the summer of 2018, beginning the publication of detailed no-deal guidance. In December 2018, the Government said it would be implementing its no-deal plans in full. By this point, 106 technical notices to help prepare citizens and businesses for a no-deal Brexit had been published. The Government planning included increased funding for a no-deal scenario, within the £4.2 billion allocated for planning for all Brexit scenarios. Planning also included 3,500 military service personnel being put on standby and local resilience forums established across England.

No-deal planning under Boris Johnson’s Government

After taking over as Prime Minister, Boris Johnson said that the Government would be turbo-charging no-deal Brexit preparations. The preparations included new Government committees to oversee the process, and an additional £2.1 billion in funding to prepare for a no-deal Brexit on 31 October. This included funding for additional border force officials and to address congestion around ports. Funding was also directed at improvements to customs systems.  Preparations involved automatic registering of businesses for customs purposes, and adjustments to the already announced temporary tariff regime in the event of a no-deal Brexit. In addition, the Government launched the ‘Get Ready for Brexit’ advertising campaign, providing £100 million to fund the campaign.

The Government’s preparations were summarised in the No Deal Readiness report published on 8 October. This detailed the Government’s preparations across a range of sectors, including on: borders; citizens; data protection; energy and environment; different industry and service sectors; public services; security; public services; Northern Ireland and devolved administrations.

In his statement on the report, Chancellor of the Duchy of Lancaster Michael Gove drew attention to 750 pieces of Government guidance setting out the steps that businesses, traders and citizens should take in order to prepare for a no-deal Brexit, and 31 country guides covering EU and EFTA states setting out what UK nationals living there needed to do.

Mr Gove made another statement on Brexit preparedness on 24 October, and said that the Government’s ‘Operation Yellowhammer’ contingency plan for a no-deal scenario had been triggered. He said the Government was continuing to advise hauliers, work with local resilience forums to finalise traffic management plans and seeking to ensure the smooth flow of goods across the English channel. Contracts had also been announced with shipping operators to deliver freight capacity.

The Government was also laying the final statutory instruments to ensure all critical Brexit-legislation was in place for exit day. Mr Gove warned that there would be unique challenges in Northern Ireland, and that the restoration of direct rule would be a possibility.

Operation Yellowhammer was stood down following confirmation that the EU had agreed to extend the Article 50 period on 28 October.

EU no-deal preparations

The European Commission began preparing for a possible no deal in December 2017 with most measures announced prior to the originally scheduled Brexit date of 29 March 2019.

Further contingency measures were announced at the beginning of April 2019, providing for continuation of basic air, road and rail transport connectivity between the UK and EU for a limited period of time, and a legal framework for continued reciprocal fishing access. There would also be compensation for EU27 fisherman hit by a no-deal Brexit. In July 2019, the EU adopted a regulation enabling continued funding to the UK from EU programmes in 2019 provided the UK continues to contribute to the EU budget and follows EU rules. It also later proposed continuing this arrangement into 2020.

The EU has ruled out ‘mini deals’ with the UK in the event of no deal, instead focusing on unilateral measures to provide for continuity in some areas. The European Commission published a final preparedness checklist on 4 September, and proposed further funding for business, workers and Member States affected by a no-deal Brexit. 

In a no-deal scenario decisions on the rights of UK citizens in EU Member States will fall to the Member States themselves. The European Commission has encouraged a generous approach. Member States have agreed to measures to continue the rights of resident UK citizens for a temporary grace period, with the opportunity of applying for permanent residence.

UK disengagement from the EU

Along with increasing its no-deal preparations, Boris Johnson’s Government reduced the UK presence in EU institutions and decision-making. It announced that there would no longer be a UK presence at some EU meetings. Since July, the UK has abstained in all but one vote in the Council of the EU.

The Government also confirmed in August that the UK would not nominate a member of the new European Commission scheduled to take office on 1 November. In agreeing to extend the Article 50 period on 28 October, the European Council however said that the UK was obliged to suggest a candidate for the new Commission.

Prior to taking office Commission nominees are subjected to European Parliament Committee hearings and then the full Commission is subject to an approval vote by the Parliament.  The new Commission has been delayed in taking office following the European Parliament’s rejection of candidates from three Member States. The UK could therefore nominate a candidate in time for the new Commission taking office. The outgoing European Commission, including the UK Commissioner Sir Julian King, currently remains in office in a caretaker capacity.   

Recent ‘no deal’ analysis

Reports have been published by a range of organisations since July 2019 on the possible impact of a no-deal Brexit. This also includes Government reports (some leaked to the press) and reports from other public bodies and prominent organisations.

The Government’s ‘Operation Yellowhammer’ report, leaked to the press in August, suggested there would be significant disruption at the border, logjams disrupting the fuel supply and reductions in the supply of fresh food. Medical supplies would also be vulnerable. It also warned of the possible closure of two oil refineries, job losses, strike action and protests. There would also be long delays at the Spain-Gibraltar border. The Government published a version of the report in September after being required to do so by a Commons motion.

A National Audit Office report in October also said there were significant risks to the smooth operation of the border, with disruption likely. A HMRC report in October said additional administrative burdens for UK-EU trade would cost UK businesses £7.5 billion a year.

A report from the Institute for Fiscal Studies in October said that in a relatively “benign” no-deal scenario, the UK would be 2.5% smaller in 2022 than it would be in the current base scenario of Brexit being delayed. The Office for Budget Responsibility said in July that public borrowing in a no-deal scenario would be double what it would be if the UK left the EU with an agreement.

 

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