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Brussels steps up emergency planning for no-deal Brexit

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Brussels steps up emergency planning for no-deal Brexit

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Brussels steps up emergency planning for no-deal Brexit

Measures include keeping Channel tunnel open and sustaining financial services

Dubbed 'the parachute'” by some in Brussels, the provisions would stagger the most severe effects of Britain’s departure © FT montage

The EU is quietly stepping up work on emergency plans to cope with the first days of a hard Brexit, including transitional measures to mitigate damage should the UK crash out of the bloc without an exit deal.

Dubbed “the parachute” by some officials in Brussels, the provisions would in effect stagger the most severe effects of Britain’s March 2019 departure by using special arrangements for transport, financial services and customs.

“Hard Brexit would be like a bomb that hits you,” said one senior European government official overseeing Brexit contingency planning. “When the pressure is so high everything becomes fluid. Once hard Brexit becomes a reality you have to do something.”

At a summit on Friday, EU leaders will note the slow progress in talks and urge authorities to accelerate contingency plans for a no-deal Brexit. But so far in Brussels these have related to “preparedness”: the drive to raise private sector awareness of legal consequences and address post-Brexit anomalies in EU rules regarding the UK.

The European Commission and member states have been less open about work on specific plans to cover the first days, weeks and months after Brexit, which would permit essential cross-border activity to continue for a limited period. Officials are also considering scenarios in which the formal UK exit date could be extended by a few months to buy time for preparations.

Any unilateral EU provisions would be tailored to the bloc’s interests and would remain in force only until the EU develops the infrastructure to enforce rules for a no-deal Brexit that could last for years.

“The commission is working on basic, bare-bones arrangements, the patches to avoid absolute chaos,” said another senior EU diplomat. “But they have been very coy about it, even with us.”

All EU level work is being co-ordinated by a dedicated team reporting to Martin Selmayr, the commission’s secretary-general.

The unilateral or “autonomous” measures under the EU’s consideration include grandfathering — or maintaining — regulatory permissions, such as safety certificates for airlines and ensuring the enforceability of financial contracts signed under UK law.

Other arrangements could, for a short period, keep open the Channel tunnel, a main conduit for freight. One approach could be to apply tariffs in aggregate — based on estimates of the volume of trade on the route — rather than on individual items.

EU diplomats differ on whether the arrangement should last for hours, weeks or months.

Provisions would be made for basic levels of airline service to and from UK airports, but without full EU flying rights. “You’re going to have to think about the plane that takes off at 11pm in London on the eve of the cut-off date and lands after midnight in Paris,” said one senior French official. “Will it be allowed to land?”

Separately, some of Britain’s closest trading partners are exploring which bilateral arrangements may be required. These include negotiating with the UK over railway operations and road transport, including operating licences for trucks.

Brussels has been guarded on revealing such contingency work, for both political and practical reasons.

Some officials see disclosure of the preparations as a powerful negotiating weapon that would destabilise Theresa May, the UK prime minister, and so must be used carefully. Other hardliners do not want to admit it “may not be Armageddon” lest such an acknowledgment be seen as weakness by London, said one north European diplomat.

“We can’t have chaos. But it cannot be openly talked about,” the diplomat said. “We want to show we are able to even deal with the most severe outcome.”

A third European government officials overseeing Brexit preparations said: “The commission has prepared things to guarantee that we don’t fall off the cliff the day after withdrawal if we have no deal. But that contingency planning has to be extremely restrictive, otherwise it looks like a transition without strings attached.”

An October summit of EU leaders is seen by several European capitals as a turning point, where no-deal plans will be made more public if it is clear that a treaty agreement is not imminent.

On a practical level, the EU side also fears that revealing plans for a post-Brexit safety net will discourage the private sector from advancing its own contingency plans. Senior EU officials have told banks, for instance, that it is their responsibility to change the terms of relevant financial contracts signed since the June 2016 Brexit referendum.

In total, hundreds of pieces of EU and national legislation — both in primary and secondary law — are expected to be needed by EU officials overseeing planning.

In parallel to legal preparations, many countries are starting to bolster their capabilities to deal with a no-deal exit. The Netherlands and Belgium have announced plans to potentially hire hundreds of customs of customs officials and animal health inspectors, a move that Irish officials have also concluded would be needed.

All Britain’s closest trading partners are also looking at the additional infrastructure they may need at ports.

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