Seconds away: Round 4. 'No-deal' guides increase the range of business preparations needed

Two days after Secretary of State, Dominic Raab, updated Parliament on progress with the Brexit negotiations, a further 29 no-deal contingency papers were published by government.

Whilst striving for a negotiated agreement ahead of the UK point of exit on 29 March 2019, the UK must be “prepared for all eventualities”.

There are now more than 100 UK “Technical Notices” that set out the post-Brexit conditions.  Business, commerce and government departments all need to digest the implications and prepare for the changes.

The latest batch, posted on Friday (13 October), address the growing understanding of the gulf  between running a business today - and what it will be like in future.

Since the Technical Notices began to appear (and there is a complementary set issued by the European Commission from the EU perspective), we have been reporting on them to encourage organisations to study and react to what will be a new environment and set of regulations  in which to trade.

The subjects of Friday’s notices range include a warning that rail services between the UK and EU may be suspended – unless specific agreements can be reached with France, Belgium and the Netherlands.  This results from operators such as Eurostar holding only UK licence – today accepted across the EU, but not accepted after Brexit.

The ‘Single Electricity Market’ that supplies electricity across Northern and Southern Ireland may cease to operate.  The Department for Exiting the EU said it was keen to work with Dublin and Brussels to reach an agreement on maintaining existing arrangements - whatever the outcome of the negotiations, including no-deal.

Previous no-deal papers have warned of the risks of UK flights to the continent being grounded and Britons visiting the EU facing extra credit card charges.  Subjects added last week include:

  • Trading and moving endangered species protected by CITES

  • Breeding animals

  • Commercial fishing

  • Exporting objects of cultural interest

  • Funding for British Overseas Territories

  • Sanctions policy

  • Accounting and auditing practices

  • Consumers

Which? managing director, Alex Neill, said a no-deal Brexit could mean “a bonfire of consumer rights and protections…A no-deal Brexit would massively weaken people’s rights to take action when they purchase faulty or dangerous products from outside the UK – and the government’s advice that we all become experts in international consumer law is hopelessly unrealistic,” he said.

British subscribers to Netflix, Spotify and other online entertainment could see their access to content limited when they travel to the EU's 27 remaining member states, depending on what local rights deals and portability agreements are struck.

There would be no change for package holidaymakers unless their booking is with an EU-based firm and completed outside the UK - when they might not be protected from the firm going bust.  The UK Brexit Department is reported as saying that passengers using cross-border services should take out insurance to cover possible disruption.

 Business

Business have been notified that existing free trade agreements brokered by the EU, including with countries such as Canada, Japan and South Korea, would be null and void – and that they may face new tariffs of products.

The government stressed that the government was seeking to replicate those trade agreements as far as possible and as soon as possible after Brexit, otherwise World Trade Organization tariffs would apply, but trade experts said there was no guarantee.

The documents state that the UK wants to maintain the benefits of the 40 free trade agreements with more than 70 countries that it is party to from being an EU member.

Bernardine Adkins, the head of EU trade and competition law at Gowling WLG, said the guidance was “pure fantasy” and that the government was unable to even begin negotiations on bilateral trade deals until exit day.  “This will take at least five years if not longer,” Adkins said. “That’s at least five years in which UK businesses will face increased costs for customs clearance and compliance.”

Another notice said British business owners could face tough new restrictions on whether they can own, manage or be directors on companies registered in the EU. British citizens who run companies abroad could be required to meet residency requirements.

Business groups are all now seriously studying the notices and reporting the impacts for their constituencies – with a consensus that there is high burden of new bureaucracy in the event of a no-deal outcome.

“This last group of technical notices reveals how high the in-tray of new red tape for retail businesses will rise on a no-deal Brexit,” said William Bain, Europe and international policy adviser at the British Retail Consortium. “Hard-pressed retailers and consumers can’t afford a no deal Brexit.”

New subjects addressed include fishing and agriculture – both of which could also be adversely affected.  Britain’s fishing fleet would no longer have automatic access to EU waters - or be allowed to land their catch in EU ports in the event of no-deal, the notices said.

 Time to prepare

Labour’s shadow Brexit secretary, Keir Starmer, said ministers had “barely scratched the surface of what would need to be done in the event of the UK crashing out of the EU without a deal”.

This sentiment echoed the evidence presented last week by the National Audit Office. (see Brexit Partners Insight).  

The issue created for business is that they need time to prepare – and if Government are not able to provide a framework in which to operate, the situation becomes “chaotic”.  One estimate is that Parliament and the civil service now need to enact over 80 pieces of legislation every day from now to March to cover the impacts already identified – and business needs time after the passing of the rules to react and prepare (see Brexit Partners Insight).

 Talks on the terms of the UK's exit are nearing a crunch point.  The deadline set to reach an Agreement allowing an exit was mid-October 2018.  This has slipped to mid-November.  After which a complex set of approvals and ratifications are needed across UK, 27 EU Member States, and the European Commission.


Reference

For a full list of over 170 European and UK Technical Notices - and responding to the challenges that they present at organisation and sector level, contact enquiries@brexit-partners.com

 

 

John ShuttleworthComment