France triggers €50M ‘hard Brexit’ contingency plan

Contingency plan sees investment in ports and airports, and measures to defend French fishing industry.

France is to invest 50 million euros to help its ports and airports cope in the event of a hard Brexit, Prime Minister Edouard Philippe announced Thursday.

The planned spending is part of a hard-Brexit contingency strategy that will also see France “defend the interests of French fishermen,” Philippe told a press conference following ministerial meetings earlier Thursday.

“The plan consists of legislative measures which aim to ensure that the rights of French citizens and businesses are protected,” the prime minister said.

“Today, we proposed that the National Assembly and the Senate adopt a habilitation law which will come into effect this week […] five orders that will provide us with a legal framework that responds to the challenges of a no-deal Brexit will be presented to the council of ministers and published in the next three weeks.”

Philippe highlighted the French government’s responsibility to ensure the “least possible impact” if Britain exits the European Union without a deal on March 29.

Planning across the EU for a potential no-deal Brexit has been ramped up after U.K. MPs heavily rejected Prime Minister Theresa May’s Brexit deal Tuesday.


Read this next: Japan’s Hitachi suspends UK nuclear project

UK police advise shops to hire extra security for no-deal Brexit

Fears about shortages may lead to panic buying and crowd control problems for retailers.

LONDON — U.K. police are advising retailers to consider hiring extra security guards in the event of a no-deal Brexit, amid fears that public concern about potential shortages of food and other goods could lead to crowd control issues at shops.

Contingency planners are concerned supermarkets and other retailers may have to deal with a rush of customers if fears of shortages leads to panic-buying. However, in a statement, a spokesperson for London’s Metropolitan Police said they have no information to suggest that looting is a likely outcome of a no-deal Brexit.

“In line with similar advice given at a national level to the retail industry, we are suggesting to retailers that they may wish to consider planning for additional security in the event that concerns about shortages of goods leads to a significant increase in customers,” a Met spokesperson said.

“We are having these conversations in order to minimize the demands on policing from any resulting large crowds or queues at shops and as part of our regular civil contingency engagement with businesses and partners.”

Shortages caused by potential disruption at ports are one of the main concerns for contingency planners preparing for the prospect of the U.K. leaving the EU without a deal on March 29.

Officers from the Metropolitan Police Service secure the area outside the Houses of Parliament in London on Janaury 8, 2019 | Niklas Halle’n/AFP via Getty Images

With MPs widely expected to vote down Theresa May’s Brexit deal on Tuesday, a no-deal Brexit remains the default outcome. While a majority of MPs will try to prevent such a scenario, it is not yet clear how this will be achieved and the government, public services and businesses continue to plan for all outcomes.

Paul Blomfield, shadow Brexit minister for the opposition Labour Party, which opposes a no-deal outcome, said: “Every day brings another example of why the government should rule out a no-deal Brexit once and for all.”

“High street retailers are already struggling. The idea that they should now have to consider hiring extra security staff because of the government’s failings is simply untenable.”

The food and drink, and retail industries have warned of pressure on supply chains if new checks at EU or U.K. ports lead to long delays for goods crossing the Channel to the U.K.

Many civil service staff have been diverted from their usual roles to help manage preparations for a potential no-deal outcome.

While the police advice does not pre-judge whether there will be shortages, it reflects an acknowledgement that public anxiety about such an outcome could lead to increased demand, whether supply problems materialize or not.

Metropolitan Police Commissioner Cressida Dick warned late last year that a no-deal exit would cause problems for the police, particularly around security cooperation with the EU and access to law enforcement databases.

The advice to shops to seek private security assistance “to minimize the demands on policing” suggests that police forces, whose funding and officer counts have been cut considerably in recent years, are seeking to avoid committing officers to low-level public order events at a time when resources may be over-stretched.

A spokesman for the National Police Chiefs Council said that police “do not expect to be involved in responding to any food shortages.”

However, the spokesman added: “Supermarkets have their own security and procedures but police forces will assess any requests for assistance, and continue working with communities through Local Resilience Forums. We are considering scenarios provided by government to inform our planning.”

The Home Office said that such plans are an operational matter for the police, but that the government is working with forces nationally via the National Police Coordinating Centre in contingency planning for all eventualities stemming from Brexit.

This week the government moved into a new phase of the public information effort to prepare citizens and business for Brexit, with a national radio advert and social media campaign launched on Tuesday.

Cressida Dick, Commissioner of the Metropolitan Police | Chris J. Ratcliffe/Getty Images

Many civil service staff have been diverted from their usual roles to help manage preparations for a potential no-deal outcome, government officials said, and Whitehall has now activated all its no-deal contingency planning.

However, the British Retail Consortium, which represents 5,000 retail businesses, said it has not yet heard from any of its members regarding no-deal security advice they had received.

If the deal does not get MPs’ backing, the next steps remain unknown, with Labour pushing for a general election and a renegotiation, other MPs seeking a compromise alternative deal, and many Brexiteer MPs pushing May to press ahead with a no-deal exit.

This article is from POLITICO Pro: POLITICO’s premium policy service. To discover why thousands of professionals rely on Pro every day, email pro@politico.eu for a complimentary trial.


Read this next: How a Russian firm helped catch alleged data thief

Calais port boss: UK plan to create new Brexit trade routes ‘disrespectful’

‘There will not be any delay’ at Calais if Britain crashes out of the EU, Jean-Marc Puissesseau says.

A no-deal Brexit will have no impact on the flow of truck traffic through Calais port, the terminal’s boss, Jean-Marc Puissesseau, insisted on Wednesday while lashing out at British plans to create alternative ferry routes.

At present, some 10,000 trucks pass over the Channel on a daily basis between Dover and Calais at peak times. But the lack of space for customs and regulatory checks on the British side means the U.K.’s Department for Transport is funding alternative routes — like a Ramsgate to Ostend link — threatening to drain traffic from Dover-Calais.

Puissesseau insisted on the BBC’s Today program that his port will not restrict transit under a no-deal scenario. “There will not be any delay,” he said. “The trucks will be passing as they are doing today.” Puissesseau said preparations include an information campaign for hauliers and creating special checkpoints on-site.

But Cabinet Office Minister David Lidington later told the Today program that Calais does not have infrastructure in place to carry out all the necessary checks in the event of a no-deal exit.

“European law says all food exports and livestock exports from a third country to the EU have to be inspected 100 percent [and] checked at a designated border inspection post,” said Lidington.

Puissesseau said he was “very angry” that Seaborne Freight had been awarded a contract by the British government for ferry services even though it does not own any ships.

“I’m very shocked, I consider it disrespectful for Calais and Dover,” said Puissesseau.

He said the only benefit could be that migrants camped at Calais hoping for transit into the U.K. could move to Ostend as that port site is less protected.


Read this next: Suspicious packages delivered to European, US consulates in Australia

UK MPs to vote on Brexit deal on January 15

Theresa May had delayed the vote on the deal agreed with the EU before Christmas.

LONDON — The House of Commons will vote on the Brexit withdrawal deal next Tuesday, January 15, Prime Minister Theresa May told her Cabinet today.

The debate will be opened again Wednesday by Brexit Secretary Stephen Barclay and will be closed by May next Tuesday, her spokesman told journalists at a briefing today.

May had delayed the vote on the deal agreed with the EU27 leaders before Christmas to seek further assurances over the Northern Irish backstop, amid opposition from her own MPs.


Read this next: German far-right MP in hospital after ‘politically motivated’ attack

Irish government prepares for no-deal Brexit with ‘sobering’ contingency plan

Dublin’s Plan B makes for ‘stark reading,’ Ireland’s Minister for Foreign Affairs and Trade Simon Coveney warns.

Ireland will need to pass 45 emergency laws ahead of Brexit Day if U.K. MPs fail to back Theresa May’s Withdrawal Agreement next month, according to the government’s contingency plans.

In its 131-page “Getting Ireland Brexit Ready” report published late Wednesday, the Irish government says the country’s domestic legislative program will require significant legal changes before March 29, 2019 in areas such as agriculture, the single electricity market, housing, health care and cross-border trade, among others.

Speaking to media in Dublin Wednesday night, Ireland’s Minister for Foreign Affairs and Trade Simon Coveney said the report was worrying for the trading relationship between Northern Ireland and the Republic.

Dublin’s “contingency plans for a no-deal Brexit make for sobering and stark reading,” Coveney said. “The report would require an immediate focus on crisis management and possible temporary solutions.”

The contingency plan notes that as England is the land bridge between Ireland and the European Continent, severe traffic delays in the aftermath of a no-deal Brexit are likely on the Dover-Calais shipping route, and adds that Ireland’s transport department is working with companies to identify alternatives.

The paper says the government’s main focus is to prevent the emergence of a hard border between Northern Ireland and the Republic.

Extra land will be needed at Dublin and Rosslare ports and at airports to deal with the “significant increase” in checks that will be needed if the U.K. crashes out of the EU, according to the report.

The additional facilities required at Dublin port will include 33 inspection bays for trucks coming off ships, 270 parking spaces to prevent logjams of trucks awaiting inspection, a dedicated border control post for the movement of live animals and new office space. Similar facilities will be required at Rosslare port in the southeast of the country, which is a major passenger and freight route to northern France.

Extra inspection rooms and a border control post for animals will also have to be constructed at Dublin airport.

Legislation is currently being prepared to address the issue of medicine supply and cross-border medical services, according to the report.

Vehicles cross the border between Ireland and Northern Ireland | Paul Faith/AFP via Getty Images

The paper says the government’s main focus is to prevent the emergence of a hard border between Northern Ireland and the Republic, though it doesn’t specify how that will be prevented if Westminster rejects the U.K.-EU Withdrawal Agreement.

The Republic of Ireland has an open land border with Northern Ireland, which is in the U.K. If the U.K. leaves the EU without a Brexit deal, the dividing line separating the two jurisdictions will become the frontier between the two.

Coveney said the plan is an “evolving document” and will be subject to change as talks continue between London, Brussels and Dublin.

The Irish Cabinet will meet on January 3 to discuss further contingency planning.


Read this next: Senate passes short-term spending bill to avert shutdown

UK publishes post-Brexit immigration plan

EU citizens’ automatic right to settle and work in the UK will end.

LONDON — British businesses will be given “time to adjust” to the end of free movement from the EU, U.K. Home Secretary Sajid Javid said while announcing plans for a “new route” for workers of any skill level to come to the U.K. for a year at a time after Brexit.

The policy, contained in the U.K. government’s long-awaited white paper on immigration, will remain under review but could stay in place until 2025.

It would apply to nationals of unspecified “low risk” countries but is aimed at ensuring sectors that depend on EU labor continue to have access to it after Brexit, the white paper states. EU citizens’ automatic right to settle and work in the U.K. will end.

The white paper states that the U.K.’s new immigration policy should “control the numbers and type of people” coming to the U.K. and should “reduce annual net migration to sustainable levels as set out in the Conservative Party manifesto.

However, speaking to BBC Radio 4’s Today program on Wednesday, Javid refused to repeat the Tory 2017 manifesto’s commitment to bring annual net migration to the U.K. — currently estimated at around 273,000 — down to the “tens of thousands.”

But when asked during her final Prime Minister’s Questions session of 2018, Theresa May said – categorically — that reducing numbers to the tens of thousands was still the government’s intention.

As recommended by the independent Migration Advisory Committee earlier this year, there will be no cap on high-skilled workers coming to the U.K. from either EU or non-EU countries. The MAC suggested that, alongside recognized qualifications, workers coming to the U.K. would require a minimum salary of £30,000.

The government is not yet committing to this figure, and will now undergo a a 12-month period of consultation with businesses before finalizing immigration rules.

However, a new Immigration Bill, enshrining in law the end of free movement, will begin its passage through parliament on Thursday and will need to be completed by the U.K.’s exit day if the country leaves the EU without a deal.

If the U.K. leaves with a deal, EU migrants will continue to enjoy their existing free movement rights during the 21-month transition period. When the transition ends in December 2020, the U.K.’s new immigration rules will come into force.

The U.K.’s final immigration rules could also be subject to trade negotiations with the EU and with other countries, which are likely to seek favorable access for their citizens as a quid pro quo for improved trading terms.

In his foreword to the white paper, Javid acknowledged that the “future system will be flexible as we go on to strike future trade deals with the EU and other countries.”

Under the new temporary “route,” workers would be able to secure a visa to come to the U.K. for a year, with or without a job offer. After 12 months they would be subject to a 12-month “cooling off period,” meaning they could not renew their temporary immigration status for a year. They would also be unable to access public funds or bring dependants to live with them.

The white paper states: “We acknowledge that there are particular difficulties in recruiting staff in certain parts of the UK, particularly more rural and remote areas and regions. We also recognise that some sectors have built up a reliance on lower skilled workers from the EU, often for relatively short periods, such as those which require additional workers in the run-up to Christmas.

“We recognise that employers in these areas require a period of time to change their ways of working once they have certainty about the shape of our future immigration system.”

Javid described the measures in his white paper foreword as “a transitional measure, a temporary short-term workers route to ensure businesses have the staff they need and to help employers move smoothly to the new immigration system.”

He added: “We understand this is the most significant change to the immigration system in more than 40 years, and so employers will need time to adjust.”

Philip Hammond hits out at Macron over ‘bizarre’ Brexit fishing threat

‘His domestic audience was getting a bit frisky,’ UK chancellor says.

French President Emmanuel Macron’s “bizarre suggestion” that the Brexit deal gives the EU considerable leverage to force the U.K. to grant EU fishing boats access to its waters was aimed at a “frisky” domestic audience, U.K. Chancellor Philip Hammond said Wednesday.

Speaking to the BBC’s Today program, Hammond linked Macron’s comments on Sunday that the U.K.’s exit from the Northern Ireland backstop could become contingent on an EU-friendly deal on fishing to the protests against fuel tax rises in France.

“I understand why President Macron felt the need to say what he did. He’s obviously got his own domestic audience, and his domestic audience was getting a bit frisky on Sunday as I remember the events in Paris,” Hammond said. “But what he said is actually slightly bizarre, because the backstop arrangement that he’s threatening to, quote, ‘keep us in,’ would give him no ability to access British waters.”

Two people have been killed and over 600 injured since the French protests against gas price hikes began.

Hammond also said during the interview that the government would not publish its legal advice on the Brexit deal, despite a binding commons motion passed earlier this month.

“No, there’s a very important principle here that the government must be able to commission impartial legal advice that tells it absolutely like it is,” Hammond said. “It would be impossible for government to function if we create a precedent.”

Labour’s Shadow Brexit Secretary Keir Starmer has written to David Lidington, May’s de facto deputy, to remind him that the House of Commons had unanimously passed a motion demanding the government hand over the full advice.

Hammond also said the U.K. will be worse off economically under any scenario post-Brexit than if it had stayed in the EU.

“If you look at this purely from an economic point of view, there will be a cost from leaving the European Union because there will be impediments to our trade,” Hammond said. He said the prime minister’s deal “minimizes those costs,” but admitted “the economy will be slightly smaller in the prime minister’s preferred version of the future partnership.”


Read this next: Trump: ‘I don’t do anything … just for political gain’

Trade, Gibraltar and fish dominate final Brexit talks

Brexit talks continued into the night Tuesday, just hours before a planned visit to Brussels by Theresa May.

Just hours before Theresa May heads to Brussels to put the final touches to a Brexit deal with Commission President Jean-Claude Juncker, negotiators are still grappling with major points of disagreement between the two sides — notably on fisheries, Gibraltar and the rules governing trade in goods.

Intense discussions continued Tuesday night, with the talks centering on May’s controversial proposal for the U.K. to stay effectively within the EU single market for goods but not services, three EU27 diplomats confirmed.

EU leaders have long referred to that as a threat to the integrity of the single market and in a briefing for ambassadors Tuesday night, Sabine Weyand, the EU deputy chief negotiator, sought to reassure member countries. She said Brussels would stick to its red lines, telling them the EU was “not compromising on anything.”

“We are not stuck. We’re still working on it. Goods will be discussed tonight [Tuesday],” said one EU diplomat.

The U.K.’s proposal is to maintain a free-flowing goods trade by adopting a common rule book with the EU, while removing trade tariffs and quotas. That is central to the so-called Chequers plan agreed by the U.K. Cabinet in July at May’s eponymous country residence.

“Spain [is] not convinced yet on Gibraltar and causing some serious waves” — EU diplomat

The plan is unpopular with Brexiteers in her own party because it will mean that after Brexit the U.K. is subject to EU rules that is has no control over, but it is central to May’s aim of maintaining near frictionless trade in goods with the bloc. For the EU, it would jeopardize the single market by allowing unfair competition for British businesses.

While ambassadors were united in their desire to defend the integrity of the EU single market, there were also signs at the meeting of tensions between member countries over the final stages of the talks. While Spain has made no secret in recent days that it is not happy with the wording on future negotiations regarding Gibraltar, the diplomat from one founding EU27 country warned against pushing the U.K. too far and insisting on a text it could not sign up to. The diplomat said his country’s leader would only attend a hastily convened special summit in Brussels on Sunday if the agreement had been finalized by then.

“Leaders cannot be involved in drafting and some of them have made clear they will show up only if the deal is closed,” said a second EU diplomat.

The talks are now focused less on the 585-page draft Withdrawal Agreement published last week that sets out the legally binding terms of Britain’s departure from the EU, but more on the political declaration that will be agreed alongside it. A much vaguer seven-page summary of that document setting out an outline of the U.K.’s future relationship with the bloc has already been made public. Weyand told ambassadors she now expects that text to grow to 22 or 23 pages.

Gibraltar remains a point of contention and disagreement in Brexit talks | Jorge Guerrero/AFP via Getty Images

May has herself emphasized the vital nature of the document, telling the BBC on Sunday that “the thing that’s going to make a difference to people’s lives is the future relationship … It’s in the national interest to get that deal right.”

That sentiment was repeated at the meeting Tuesday evening, with one diplomat from a major EU country saying that it could not be approved by negotiators without sign off from member countries. After two years of EU27 unity during the negotiations, they could not “fall at the final hurdle,” the diplomat said.

On fisheries, Weyand told ambassadors there is still “divergence.” The U.K. wants a Norway-style arrangement where catch quotas are renegotiated on an annual basis. But it has said this will result in less access than EU27 fleets currently enjoy. France and other countries are pushing for the political declaration to make clear that a future U.K.-EU free trade deal will depend on the U.K. offering similar access to its waters as it currently does.

On Gibraltar, Weyand told ambassadors there is currently “total blockage” on the issue, one diplomat said. Spain is adamant the text must make clear that the EU’s negotiations on its future relationship with the disputed territory must be conducted separately to those with the U.K. — and that they can only proceed with Madrid’s approval.

“Spain [is] not convinced yet on Gibraltar and causing some serious waves,” one EU diplomat said. In an interview with POLITICO on Tuesday, the country’s foreign minister, Josep Borrell, said his government wants a clear statement in the text.

“There will be specific negotiations about Gibraltar between the European Union and the United Kingdom but for these agreements Spain … has to agree,” he said.

European Commission President Jean-Claude Juncker is finishing up work on a Brexit deal with British Prime Minister Theresa May | Aris Oikonomou/AFP via Getty Images

On other specific points, Weyand said the political declaration will include: a statement on cooperation between the U.K. Civil Aviation Agency and its EU counterpart the European Aviation Safety Agency to avoid travel disruption; U.K. participation in the Galileo satellite program, but only as a third country; a governance arrangement for the future relationship similar to the Withdrawal Agreement, with the European Court of Justice acting as the sole arbiter of EU law. The only exception to that would be “when national security is at play,” said one EU diplomat who spoke to POLITICO.

If Juncker and May are able to conclude a deal at their meeting Wednesday afternoon, EU ambassadors will meet again on Thursday to discuss the final text. A separate meeting of prime ministerial EU advisers (so-called sherpas) will happen Friday so that leaders can be briefed on the final deal before the Sunday summit, at which the full package will receive formal sign off. At that point it will still need to be ratified by the U.K. and EU parliaments.

A U.K. government official declined to comment on which topics were dominating the final stages of the talks, saying only: “Negotiations are ongoing.”

Charlie Cooper contributed reporting.


Read this next: Spanish foreign minister: UK will split before Spain

Superbug risks fail to dent attitudes to antibiotics

Antimicrobial-resistant infections could be killing more than 33,000 people a year in Europe.

Warnings about drug-resistant superbugs aren’t enough to change most people’s behavior on using antibiotics, according to a Europe-wide poll out Thursday.

The Eurobarometer survey reported seven in 10 people who received information telling them not to take antibiotics unnecessarily said it didn’t change their views on using them.

Excess use of the drugs is contributing to a growing threat of antimicrobial resistance and related infections. As germs multiple they can develop the ability to defeat the medicines designed to kill them — and those infections could be killing more than 33,000 people a year in Europe, according to recent estimates.

“It is ridiculous,” European Health Commissioner Vytenis Andriukaitis said in response to the fact that people aren’t responding to warnings, at an event in Brussels Thursday. “We have science on one hand and lack of trust on the other.”

“Unless we act decisively, immediately and together, we could face a public health and financial disaster,” he added.

The EU is failing to gain traction with its effort to get member countries to combat the rise of resistance.

The Eurobarometer survey showed the number of people who had taken antibiotics in the last 12 months fell from 40 percent in 2009 to 32 percent in 2017. But less than half of people said they were aware that antibiotics don’t work to treat viruses, and 20 percent said they take antibiotics to treat flu or colds.

Seven percent of people said they took antibiotics without having seen a doctor or getting a prescription.

Andriukaitis said the survey, which polled around 27,400 people in 28 countries, shows Europeans “are still not sufficiently aware of the dangers of AMR.”

A report from the European Centre for Disease Prevention and Control (ECDC) on Thursday raised particular concern about the rise of superbugs in hospitals and care centers — estimating there are around 8.9 million cases of health care-associated infections in European facilities each year, many of them caused by multidrug-resistant bacteria.

Brussels is largely forced to take a backseat to national capitals | George Frey/Getty Images

The ECDC said these infections are being fueled in part by overprescribing of so-called broad-spectrum antibiotics, which wipe out multiple forms of bacteria and are stronger than traditional, more targeted antibiotics such as penicillin. Prophylactic antibiotics, meaning those prescribed before a surgery in anticipation of potential infection, are also being prescribed for too many days, it said.

Meanwhile the EU is failing to gain traction with its effort to get member countries to combat the rise of resistance.

The Commission released a One Health Action Plan in 2017 that included guidelines on how to ensure prudent use of antimicrobials in people, and promised to promote global standards in areas such as trade. It also set aside funding for research to monitor and control potentially fatal infections, and develop new antibiotics or vaccines to combat transmission.

But the EU’s limited competence in health means Brussels is largely forced to take a backseat to national capitals. While governments such as the U.K., Sweden and Finland have made fighting antimicrobial resistance a priority, Andriukaitis said Thursday he’s frustrated the EU can’t be more effective.

“Our main goal is to show that the EU is a best practice region fighting against AMR. But it will be empty words if you do not have concrete instruments at member states level,” he said.

Last line of defense

One area the Commission has been able to push new rules in on the use of antimicrobials in farm animals.

Andriukaitis said he is expecting a “major breakthrough in a few days” when the Council of the European Union will greenlight new rules on veterinary medicines and medicated feeds. These are designed to phase out the prophylactic use of antimicrobials as well as preventing their use to promote growth in cattle.

The EU will also under the new rules ringfence a protected list of antibiotics for human-use only — part of an attempt to keep drugs that still work in humans from becoming obsolete.

Malta and Croatia were named for their poor performances | Joe Raedle/Getty Images

The proposed list, a joint effort between the ECDC, the European Medicines Agency and the European Food Safety Authority, is expected to be put out for consultation next month, according to the ECDC.

ECDC Director Andrea Ammon said at the event Thursday that getting patients, health care providers and national governments to cut down on unnecessary prescribing will take time but there is still a chance to limit the threat from AMR.

The ECDC’s efforts to monitor antimicrobial resistance country-by-country in Europe have been “quite powerful because no one wants to be at the bottom” of the list, Ammon said. The agency also visits European countries at their request to assess their national antimicrobial resistance plans and recommend improvements.

Eight European countries saw a statistically significant drop in public consumption of antibiotics between 2013 and 2017, according to ECDC data released Thursday: Finland, Germany, Italy, Luxembourg, the Netherlands, Norway, Sweden and the U.K.

One area the Commission has been able to push new rules in on the use of antimicrobials in farm animals | AFP via Getty Images

Malta and Croatia were named for their poor performances, recording increases in antimicrobial consumption in hospitals.

A report on antibiotic use in humans by the World Health Organization published Monday concluded Greeks consume the most antibiotics on average in Europe, with Italy, France and Belgium also named as having high use.

Improvements are “not something that will happen very quickly because this epidemic has built up over years and it will take some years until it goes down. It needs sustained efforts,” Ammon said.


Read this next: The looming threat to Trump’s booming economy

Businesses call for state bailouts if UK crashes out of EU

Firms argue Brexit is a political crisis and no fault of theirs.

LONDON — A no-deal Brexit could require U.K. government bailouts like those following the financial crisis to prevent businesses from going bankrupt.

That’s the view of some in industry who see Brexit as a problem created by politicians that threatens to destroy British businesses and bring about an economic crisis.

Even if negotiators in Brussels craft a Brexit divorce deal in the coming days, it is far from certain that any agreement will be ratified by MPs in Westminster, and the U.K. could still leave with no deal at all, even though many among the country’s traders, manufacturers and in town halls say it is probably already too late to prepare adequately for it.

If the U.K. does fall over the Brexit cliff edge, ministers must leverage the government’s “financial muscle … in rather the way they did for the banks during the [2008] crash,” said Ian Wright, director general of the Food and Drink Federation, which represents 7,000 firms.

“If the government was to say no [to that] now there would be a very big question from British industry: ‘You were prepared to fund the banks who brought the crisis on themselves … but you’re not prepared to support British business which is completely innocent of any fault in the current circumstances?’”

Local councils have also expressed dismay at gaps in no-deal planning.

“Very few businesses in the U.K. asked for this to happen,” he added. “This is a crisis entirely created by politicians.”

While discussion of no-deal preparations has focused on what the government is doing — from re-engineering motorways to serve as lorry parks, to hiring more customs officers — industry and local government has also had a role to play.

They are closer to the day-to-day reality of U.K.-EU trade and their message is simple: At this late stage, there’s not much more that can be done to prevent major disruption.

In such a scenario some firms won’t survive, many predict.

Anti-Brexit demonstrators form a chain along Whitehall in London | Tolga Akmen/AFP via Getty Images

“If you’re an exporter and a significant proportion, say 30 percent or above, of your business is with the EU, or if you’re an importer and you have critical ingredients or products that you bring in from the EU — maybe you import feta cheese or salami — I think there’s probably relatively little you can do to be prepared for a no-deal Brexit. And for those businesses it’s perfectly possible that the disruption could be terminal,” said Wright.

A U.K. government spokesperson said in response: “It is in the interests of both the EU and the U.K. to strike a good deal and we are confident this will be achieved. But as a responsible government we are making plans for all possible outcomes, including the unlikely event that we reach March 2019 without an agreement.”

“This comprehensive no-deal preparation includes informing businesses through a series of technical notices what practical steps they need to take,” the spokesperson said.

Too late

When Whitehall published more than 100 “technical notices” over the summer giving advice to businesses, public authorities and citizens on what to do in the event of no-deal, the U.K.’s business lobby was unimpressed.

“We still don’t know exactly what no-deal would look like on the day it takes effect, whether the government would relax import controls or cut tariffs as a mitigating response,” said Allie Renison, head of Europe and trade policy at the Institute for Directors, which represents business leaders. “Even its own technical notices don’t suggest this, and much of the advice on import and export with EU has been fairly general.”

Only a third of the IoD’s more than 30,000 members have done contingency planning for a no-deal Brexit, Renison said.

Businesses using the ports could turn up the day after Brexit without the right paperwork or licenses.

Those that have not are often smaller firms that have struggled to afford the investment in staff, IT systems or outsourcing needed to ensure they are prepared for an EU third-country customs regime. With continuing uncertainty about whether there will or won’t be a deal, many have gambled on there being a deal rather than make an investment they can ill-afford.

“They can only prepare when they know the exact direction of travel,” said Renison. The IoD is also calling for financial support for business, in this case to assist with the cost of professional advice on no-deal planning. The Irish and Dutch governments have offered such schemes to businesses in their countries.

“As long as it remains government policy to potentially walk away, it is incumbent on them to make further provision to help firms be fully ready for the consequences of that outcome,” Renison said.

Local councils have also expressed dismay at gaps in no-deal planning. A report prepared for a meeting of the Local Government Association’s leadership board on October 17 said the government’s technical notices do not deliver essential practical guidance — or cash — for council-run port authorities that might be required to dramatically step up operations.

A lorry arrives at Dover Ferry Terminal on April 26, 2018 in Dover, England | Dan Kitwood/Getty Images

Pauline Bastidon, head of European policy at the Freight Transport Association, one of the U.K.’s biggest business groups, representing transporters, retailers and manufacturers, tells a similar story.

“Maybe three-quarters of the things that could have been done, if companies are waking up and deciding to do it now, it’s probably too late for March 2019,” she said.

At the moment U.K. government officials are considering waiving additional customs checks for all but security purposes in the event of no-deal. To alleviate snarl-ups at the ports of Dover and Holyhead, freight that needs thorough inspection will be sent inland to one of two clearing centers in southeast England at Milton Keynes or Heathrow. But there remains uncertainty at the very top of government about the stance French authorities on the other side of the Channel will take.

The problem is not just what the port authorities will do, but that businesses using the ports could turn up the day after Brexit without the right paperwork or licenses.

Concerns about food and medicine availability are well-documented.

“That’s quite probable,” said Bastidon, “certainly in the first few weeks. But should we really blame these companies? All these things come at a cost. When it comes to expenditure, companies have to ask: ‘Is it needed now?’ … The uncertainty around whether there is going to be a deal or not, all of this means that for industry it is a gamble [to spend on no-deal contingencies.]”

The government is aware of the risks.

Appearing before the House of Commons public accounts committee on November 5, Jon Thompson, chief executive of Her Majesty’s Revenue and Customs, listed “customer readiness” as one of the greatest no-deal risks.

“We are not going to be naïve about whether businesses will be ready for day 1, no deal,” he said. “That is currently rated red. To some degree, customers will not be ready for what would happen in the event of day 1, no deal.”

The consequences

In other words, the risk of no-deal disruption is real, and so therefore is the risk of goods shortages.

Concerns about food and medicine availability are well-documented, but even in these vital areas there remains uncertainty that enough has been done.

Representatives of pharmaceutical firms and the NHS warned Health Secretary Matt Hancock on October 31 that if a damning National Audit Office report on the state of government planning was correct, then “we will have widespread shortages if we do not respond urgently.”

British Prime Minister Theresa May leaves 10 Downing Street | Jack Taylor/Getty Images

As for food, the shelves will not be bare, Wright said, but added he is aware of firms already stocking ingredients from Europe that might become temporarily inaccessible in the event of no deal.

If the disruption lasts longer than a month or so, he said, there are “very, very few businesses which could stockpile enough of their ingredients or products this side or the other side of the Channel to be able to bulletproof themselves.”

“I think there will be businesses who through no fault of their own will be put at very serious risk,” he said.