Whatever they may say, the EU27 are not prepared for No Deal
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Reports suggest that an increasing number of EU diplomats believe that a no-deal is now inevitable, which has prompted more intense rhetoric about no-deal preparedness from the EU.
Over the last few weeks the European Commission has been repeating the mantra that it is fully prepared for this outcome. It has 19 legislative measures, 63 non-legislative acts, and 93 preparedness notices. An information campaign targeting citizens and businesses, similar to the one organised by Johnson, is also planned for September.
But there are warnings that EU measures are not complete at all. In March, the lobby group Business Europe sent a letter to the Commission saying that the EU’s contingency plans “fall short of what is needed to limit major disruptions” for European businesses and citizens. More recently, the Confederation of British Industry warned about the imbalance in UK and EU approaches towards no deal preparations, noting that the EU has taken fewer steps to mitigate the disruption.
The status of UK citizens in the EU remains uncertain, as their rights will depend on national arrangements put in place by the 27 member states. Germany has only recently prepared a draft law guaranteeing a residence permit for UK citizens after a no-deal. The Commission has so far been resisting the UK’s efforts to ‘ring fence’ citizens’ rights provisions in the Withdrawal Agreement to protect them in any Brexit outcome.
Several EU measures have not been updated to take into account the Article 50 extension agreed in April, which cuts the transition time allowing for preparations. For instance, the Aviation Regulation which ensures that flights operating between the EU and the UK can continue is due to end on 30 March 2020, leaving only five months for both sides to strike a bilateral aviation deal.
The EU and Ireland have yet to publish a concrete plan of how they would respond to the Irish border issue. In the past, EU officials have said that checks on goods entering Ireland will have to be applied, but there is still uncertainty about where they would be made. Will Ireland be required to carry out inspections at the border in order to protect the single market, and what happens if it does not? Neither the Commission nor the Irish Government have been clear about this.
As pointed out by the CBI, for businesses, the lack of reciprocity in the EU’s measures is worrying. Whereas the UK government prepared measures to provide continuity for EU financial services firms, approximately ten member states have not yet put in place contingency plans for financial services. The UK will also allow data to flow in no deal, but the EU has refused to reciprocate, which will mean severe disruption for data exchange.
Moreover, EU businesses are not necessarily better prepared than UK firms. The current head of the European Central Bank (ECB), Mario Draghi, warned in March that businesses “underestimated the logistical and administrative complexities of managing a no deal Brexit.” The Commission expressed its concern about the lack of business preparations, warning that its own measures would only mitigate “the most serious disruptions.”
EU27 governments, especially in countries like France and the Netherlands, have been preparing in different ways, but they have also been under the pressure of domestic actors, including trade unions, to step up their measures, particularly in customs and border checks.
Overall, a no-deal outcome is likely to be less problematic for the EU than for the UK, but it will hit many member states’ economies, and that reality calls for a more pragmatic approach. Despite their efforts, the Commission, the EU27 and EU businesses are not fully prepared for this scenario, and maintaining the line that they are risks aggravating the existing tensions.
