Firms, EU prepare ‘no-deal’ Brexit plans

Source:AFP Published: 2018/12/19 21:58:41

May’s plan for close ties with bloc may not pass deeply divided parliament

With just 100 days until Brexit, businesses and the EU ramped up planning for the risk that the UK will leave without a divorce deal, the nightmare scenario for many companies which are now planning for an economic shock.

Prime Minister Theresa May's failure to find a deal the British parliament will approve means the world's fifth largest economy now faces three main choices: agreeing a last-minute deal, halting Brexit or leaving the EU without a deal.

No deal means there would be no transition so the exit, set in law as 23:00 GMT on March 29, would be abrupt. Bank of England Governor Mark Carney said leaving the EU with no transition could be akin to the 1970s oil shock.

May is yet to win the support of a deeply divided parliament for the deal she struck last month with EU leaders to maintain close ties with the bloc.

But British politicians have been unable to agree any alternative Brexit course, deepening concerns that the UK will, as May has warned, drop out of the world's biggest trading bloc without a deal.

"Businesses of all sizes are reaching the point of no return, with many now putting in place contingency plans that are a significant drain of time and money," the heads of Britain's five biggest business lobby groups said.

"The risk of a 'no-deal' Brexit is rising," said the bosses of the British Chambers of Commerce, the Confederation of British Industry, the Federation of Small Businesses, the Institute of Directors and the main manufacturers' organization EEF.

The EU said it would avoid interruption of air traffic, keep financial and other trade open and respect British citizens' residency rights in the bloc if Britain left without a deal in March.

But it said British trucks would lose rights to carry goods into the EU, live animals would face border checks and Britons traveling with pets would find their EU passes were no longer valid.

Pro-Europeans fear Britain's exit will weaken the West as it grapples with Donald Trump's unpredictable US presidency. It weakens Europe's economy and removes one of its only two nuclear powers.

Brexit supporters say while there may be some short-term disruption, in the long-term the UK will thrive outside what they cast as a doomed experiment in German-dominated unity and excessive debt-funded welfare spending.

The world's biggest corporates, ranging from Apple and Toyota to J.P. Morgan and Goldman Sachs, have cautioned that Brexit could complicate their businesses.

Business leaders fear additional checks on the post-Brexit UK-EU border will clog ports, silt up the arteries of trade and dislocate supply chains across Europe and beyond.

"Firms are pausing or diverting investment that should be boosting productivity, innovation, jobs and pay, into stockpiling goods or materials, diverting cross border trade and moving offices, factories and therefore jobs and tax revenues out of the UK," the business groups said.

The British government said on Tuesday it would implement plans for a no-deal Brexit in full and begin telling businesses and citizens to prepare.

Posted in: EUROPE

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