Weak leadership under Theresa May is leading EU officials to doubt Britain can ‘steer the Brexit ship
The European Union has set up a taskforce to prepare for a no-deal Brexit as officials say there is a “significant likelihood” that Britain could crash out of the bloc amowing a collapse of Theresa May’s government.
The Sunday Times has been given insight into confidential contingency plans by the European Commission and national authorities showing that they would need to invest hundreds of millions of pounds in preparing for a disorderly Brexit in 2019. Internal European Commission documents reveal how a “Brexit preparedness group” is planning for a worst-case scenario. The contingency plans include disconnecting the UK from European Union security databases, and will be shared with European governments.
In the case of a disorderly divorce, officials also revealed that Britain would only “gradually” be repaid €3.5bn (£3.1bn) of its “paid-in” capital in the European Investment Bank, an EU institution. Britain estimates its share in the bank to be about €10.2bn.
The new outfit is working separately from the team of Michel Barnier, the EU’s chief Brexit negotiator, so as not to compromise his “positive agenda of working to reach a deal”, say EU officials.
“Barnier’s task is to work on getting a deal, so it’s only normal that the team working on a worst-case scenario is separate,” said a senior commission official. He added that part of the reason for setting up the new body was the “urgent” need to “raise awareness” about the potential consequences of a “cliff-edge Brexit” among EU governments and businesses.
The no-deal taskforce held its first briefing of European officials last week. It discussed how to handle the legal and economic fallout from a no-deal Brexit on issues ranging from customs arrangements to carving up Britain’s share in common arrangements such as the emissions trading scheme, which regulates Europe’s carbon market.
Pascal Leardini, a Belgian commission official described as a “no-nonsense” operator by colleagues, is in charge of the contingency plans. Officials familiar with his work said he was not considering a scenario in which Brexit was reversed.
European capitals are conducting their own contingency planning, but the commission taskforce should propose “best practices” to be adopted as part of a common strategy to deal with a failure of the Brexit talks, officials say. Countries such as Holland and Belgium are bracing for “miles of queues” at key ports such as Rotterdam and Zeebrugge. Holland would have to hire around 800 customs officers, but officials complain that it would be “impossible” to find that many qualified workers and training new ones could take “years”.
A senior Dutch official said the EU was “working to get a deal” while at the same time “preparing for a disaster. We are looking into how many computers, parking places, customs officials we need to budget for . . . in Dutch we call this notverband, an emergency bandage.
“It’s starting to be doubtful whether the UK government can steer the Brexit ship because the leadership is so weak.”
German government sources said the likelihood of a no-deal Brexit had now become “significant”. Bilateral trade between the UK and Germany is worth more than €176bn a year.
“A no-deal outcome would be an irrational, systemic failure of colossal proportions . . . but the likelihood of it is now significant and we are working to minimise cost and disruption,” said a senior German finance ministry official.
Belgian firms are asking their government how to adjust to customs procedures for the worst-case scenario, said a senior official from the country’s economy ministry: “Half a year ago we were optimistic, now we are convinced that a no-deal is a likely option.”
Governments and businesses are waiting for a key EU summit in December, when May is expected to try an unlock the Brexit talks with a renewed offer on the so-called Brexit bill.
Foreign businesses operating in Britain have received EU guidance on the need to prepare for the UK crashing out of the EU’s single market.
“It’s an extremely muddy picture of the future, and an infinitely variable one. The longer there is uncertainty, the tougher things get — we have decisions to make about future investment,” said Graham Biggs of BMW.
Winand Quaedvlieg, of the Dutch employers’ federation VNO-NCW, said UK companies were showing “flabbergasting complacency” about Brexit. “It is as if chief executives can’t believe a government would cause such an economic mess . . . but Dutch companies are preparing for the worst.”
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