The June 2018 EU Summit that should have been a critical milestone for Brexit

With just 9 months (273 days to be precise) to go until Brexit, expectations were set a year ago that the Prime Ministers of the EU27 would have a firm proposal for a Brexit scenario placed before them to fine tune and approve at their June 2018 Summit. 

Around the World, business leaders shared this expectation.  They accept that change is inevitable - but were anticipating clarity around the new set of conditions that they would have to adapt to and operate within.

This week has seen a cascade of announcements representing a very public warning sign that political procrastination is leading to decision making that will ultimately jeopardise the UK’s chances of coming through Brexit unscathed – let alone having a ‘Brexit dividend’ at any level – citizens, businesses or Government.

One pro-Brexit economist who had made his decision on the ‘long view’ of an initial dip followed by a stronger upturn has moved the forecast ‘breakeven’ point out from 10 years to an unspecified time far in the future.

The prevailing situation was summed up by a political insider as: "a scandalous lack of clarity being displayed by Theresa May".   In reality, this leaves little option for businesses bosses and industry representatives – accountable to shareholders, employees and regulators for the survival and wellbeing of their organisations – but to invoke plans to cope with a “no-deal” scenario on 29 March 2019.

In our opinion “no-deal is better than a bad deal” are now coming back to haunt us.

And it’s not just industry and commerce that are planning for the worst, whilst hoping for the best.  Political leaders - across the EU and beyond - are issuing statements that are increasingly critical of the UK’s position.  We will feature some of these in a forthcoming briefing when we will look at the implications of a “no-deal’ on people, trade and geo-politics.

The EU Institutions are also contingency planning – earlier this month, the European Commission told diplomats at a briefing that EU countries should prepare their airports and aviation sector for a no-deal’.  The meeting, chaired by Filip Cornelis - Director of Aviation at the Commission’s Transport Department - was attended by EU27 diplomats and representatives of their civil aviation authorities.  He advised countries to be ready for the possibility of the U.K. crashing out of the EU without a deal - saying that they should consider their customs handling capacity and prepare for impacts on security, market access, safety regulations and passenger rights.

If the U.K. leaves the EU without an aviation agreement, flights would immediately cease between UK and the EU27 since EU-issued operating aviation licenses would no longer be valid.  British airlines would no longer have the right to fly to EU countries.  Even the moves that have already been made to establish subsidiaries in the EU to operate flights may be frustrated. 

The UK would also cease to be a member of the European Aviation Safety Agency (EASA), which issues the certification and licenses EU aircraft require.  This official EU guideline forms part of the ‘Risk Assessment’ undertaken by Airbus – and which they took the unusual step of making public as a document to underpin their announcement concerning future investment in their UK manufacturing base.

And for a signpost to EU thinking, this week in his address to the Irish Parliament on Friday (22 June 2018) European Commission President, Jean-Claude Juncker, said: “As the clock to Brexit ticks down, we must prepare for every eventuality, including no deal.”

The Commission has in recent months been advising different sectors to make preparations for a ‘no-deal’ outcome and has drawn up a series of legislative changes that may be required if the UK crashes out in March next year.  We will pick up on some of these that have significant impact on individuals and business shortly.

This week’s European Council summit - supposed to be a big moment in the UK’s journey to the EU exit – is unlikely to deliver anything substantive.  Certainly not as one Foreign Minister had billed it: “June is the deadline for ‘definitive progress’”.  And the question of the Irish border which, if not settled, jeopardizes the entire negotiation and increases the odds of a ‘no-deal’.

Expectations from British officials working on Brexit are low: “the EU is too distracted by the migration crisis to waste political energy turning the screw on the Brits.” 

Where does that leave the Brexit agenda?  Whilst it is widely anticipated that there will be some “sniping” at the summit: “Brexit is not top of their agenda. The ball is back in our court” concludes another. 

So - despite the best efforts of industry leaders in the run up to the Summit – we fear for a further delay in the clarity that is now desperately needed for people and businesses to plan their futures with any degree of certainty.

Brexit Partners Opinion:

Brexit Partners have been taking part in proactive discussion and survey across business and commerce.  Still, only a minority of organisations are actively assessing the impacts or preparing scenarios to cope with change.

Our Brexit Impact Assessment approach and response options continue to evolve as new scenarios emerge and negotiations unfold.

For the full text of Jean-Claude Juncker address to the Irish Parliament: