Countdown to Brexit: 13 days – Europe continues preparations for a no-deal Brexit

The European Commission has welcomed “the swift adoption by the European Parliament of a number of ‘no-deal’ contingency measures.”  These aim to ensure that “the EU is fully ready for a ‘no-deal’ scenario on 29 March”.

The ‘no-deal’ proposals adopted by the EU include:

  • ensuring - for a strictly limited period - basic air, road and rail connectivity;

  • continued reciprocal fishing access for EU and UK fisheries until the end of 2019 - and for the provision of compensation to fishermen and operators in such a scenario;

  • continuation of the PEACE programme on the island of Ireland until the end of 2020;

  • protecting the rights of Erasmus+ participants;

  • certain social security entitlements of those people who exercised their right to free movement before the UK's withdrawal;

  • technical measures on ship inspections;

  • the re-alignment North Sea – Mediterranean Core Network Corridor.

Further details of all contingency plans are available on the European Commission website.  Link listed, below.

The European Union has been actively preparing for a ‘no-deal’ scenario since December 2017.

To date, the Commission has tabled 19 legislative proposals. 17 proposals have been adopted or agreed by the Parliament and the Council.  Formal adoption of all those files by the Council will take place shortly. Two proposals are still pending.

As outlined in the Commission's “Brexit Preparedness Communications”, the EU's contingency measures will not – and cannot – mitigate the overall impact of a "no-deal" scenario - nor do they “in any way compensate for the lack of preparedness or replicate the full benefits of EU membership or the favourable terms of any transition period, as provided for in the Withdrawal Agreement”.

The proposals are temporary in nature, limited in scope and will be adopted unilaterally by the EU.

The Commission stresses that they are not “mini-deals” - and have not been negotiated with the UK.

In addition to this legislative work, the Commission has also intensified its work on proactively informing the public about the importance of preparing for a “no-deal” Brexit.  The Commission has published 88 preparedness notices, along with 3 detailed Brexit Preparedness Communications.

The Commission stepped up its “no-deal” outreach to EU businesses during March 2019 in the area of customs and indirect taxation.

The Commission has held technical discussions with the EU27 Member States on both: “general issues of preparedness and contingency work”; and “specific sectorial, legal and administrative preparedness issues”.

The Commission's Deputy Secretary-General, Céline Gauer, and a team of Commission officials, have been visiting all capitals of the 27 EU Member States to provide any necessary clarifications on the Commission's preparedness and contingency action - and to discuss national preparations and contingency plans.

This includes today’s briefing for EU27 nations ahead of the upcoming European Council summit – when it is scheduled to ‘consider’ Brexit on 21 March.  We note today’s publication of advice regarding any request from the UK to extend Article 50 that a Brexit date after 30 June 2019 will require the UK to fully participate in the European Parliament elections to be held towards the end of May 2019.

Germany

Germany has budgeted for an extra 900 customs officials to help handle goods traffic after Brexit.  The government’s no-deal preparations also include provisions so that insurance products and some derivatives traded in euros can still be covered under the current passporting regime.

The negative economic impact of a hard Brexit cannot be fully offset, German Economy Minister, Peter Altmaier, told Handelsblatt newspaper in a recent interview.  “We are already seeing that the weakness of the British pound is hitting Germany’s export industry hard,’’ he said.

France

The French Parliament in December passed a law to keep passenger traffic, road transport and trade operating between France and the UK in case of a no-deal scenario. The package of measures also allows the government to use executive orders to smooth out travel, residence permits, work issues and access to welfare for British citizens in France.

French European Affairs Minister Nathalie Loiseau said the measures would allow a “stable situation for people” and “fluid communications” between France, the EU and the UK.

Spain

The Spanish government plans to enact a decree by February on contingency plans in the event of a hard Brexit.

The government has set up a page with Brexit advice for citizens and companies on the Prime Minister’s website.  The three main areas of concern for Spain are aviation, financial services and agriculture-fishing.

The government has been encouraging companies to improve their Brexit planning, including measures to avert damage from a cliff-edge scenario according to Economy Minister, Nadia Calvino.

Netherlands

The Netherlands - home of Europe’s biggest port at Rotterdam - will hire 928 extra customs officials by the end of 2019, increasing its 5,000-strong customs force by 18 percent. At least 300 of the new hires will be in place by March 29.  The focus of the boost in staff will be on the ferry traffic to Britain, which transports fresh flowers and produce daily.

The Dutch Food and Consumer Product Safety Authority will hire 143 additional staff, the bulk of which will be veterinarians for examining animal shipments for import and export.  Two-thirds of the extra staff will be on board by Brexit day.

Sweden

Sweden is focusing on about 10 areas where “consequences could be immediate and serious” if there is a no-deal Brexit. These include: border issues, financial services, citizens’ rights and pharmaceuticals supplies – according to Swedish EU Minister, Ann Linde, last week.

The government in Stockholm is preparing measures “needed to soften the negative consequences in these areas,” she said. The government has passed measures on settlement of financial transactions and proposals on derivatives contracts are due to become effective in March.

Belgium

The Belgian government has warned companies and citizens that a no-deal Brexit could lead to additional tariffs of 2.2 billion euros ($2.5 billion) for Belgian businesses and a loss of more than 40,000 jobs.

In September the Government launched an online tool called the “Brexit Impact Scan” to help businesses assess their preparedness for the U.K.’s exit.  More than 5,000 companies have taken advantage of the tool - three-quarters of them in the country’s northern region of Flanders.  About 85 percent of Belgian firms exporting to Britain are Flemish.

Europe’s second-biggest port is Antwerp – and Belgium is increasing its 3,400-strong customs force with a first wave of 141 new staff, who will be operational as of April 2019.  

Belgium is investing in drones and underwater scanners for surveillance of its coastline and the North Sea, according to the Finance Ministry.

Austria

The Austrian government has prepared an omnibus law for all the legal changes a hard Brexit would require, from civil rights to transport to customs.  Austria also has developed two versions of a website to explain the impact of Brexit to the general public -– one for a ‘deal’ and one for ‘no-deal’. The website isn’t live yet, as the government is waiting for clarity on the Brexit process before launching the site in order to avoid confusing the public and undermining the efforts to ratify the Withdrawal Agreement.

The Austrian Chamber of Commerce, meanwhile, has already set up a website telling businesses what to do to cope with Brexit risks. It includes help in dealing with more-complicated customs procedures and trademark issues.

The government also is considering letting Austrians living in the UK keep their Austrian passport even if they take UK citizenship after Brexit - an exemption to their present rules.

Denmark

A hard Brexit could cost Denmark as much as 1 percent in lost gross domestic product, the government in Copenhagen said last month.  A ‘hard’ Brexit would mean 4,300 kroner ($660) in lost GDP per capita - according to a report by the Economy Ministry.

The Danish government has hired more customs officers and asked banks to prepare contingency plans for a no-deal Brexit.

The Danes are particularly worried about food and energy exports, fisheries and the future of derivatives clearing out of London.

Finland

Finland expects delays in processing shipments as volumes of imported goods that need to be declared are estimated to increase by a quarter in the case of a no-deal divorce.  As many as 60 new staff will be needed for processing the declarations and shipments, according to Finnish Customs.

The Finnish Medicines Agency is mapping out pharmaceuticals that might face supply constraints from a hard Brexit and expects to have a full list of such drugs by early February.

The Interior Ministry is still considering how to handle the 5,000 Britons currently in Finland in case of a no-deal.

The Tax Authority has set up a Brexit website and made changes to its computer systems, in particular related to the value-added tax paid by companies importing and exporting goods.

Portugal

Portugal won’t require British citizens to have a visa even if there is a no-deal Brexit.  It wants reciprocal treatment on this and other measures from the UK government.

Tourism represents about 14 percent of Portugal’s gross domestic product, and the British rank as its biggest group of visitors – with 22 percent of all passengers who arrive at Portuguese airports being British

The government estimates that there are more than 22,000 Britons who are permanent residents in Portugal.

The government will make 50 million euros available for loans to help companies adapt to a no-deal divorce.  

Sines and Lisbon - two of Portugal’s main ports, are already well-equipped to handle non-EU trade, so a Britain outside the bloc won’t be a problem.

A study sponsored by the Business Confederation of Portugal showed that exports to the UK could drop as much as one-quarter in the medium to long term with Brexit, and that Portugal’s economic growth could be hit to the tune of 0.5 percent to 1 percent.

Latvia

The Latvian customs agency plans to hire 48 additional people in the event of a no-deal Brexit.  The Foreign Ministry in Riga estimates that customs-processing costs will increase by about 10 million euros over the next three years, with the biggest component of that being additional customs and veterinary checks.

The Foreign Ministry has created an email address for Brexit-related inquiries; and every government ministry is shortly to have a special webpage on Brexit.

References

European Commission no-deal guidance: EC website  ; Commission's Brexit Preparedness Communications  ; customs and indirect taxation

Brexit Partners: eu-ratchets-up-no-deal-advice-to-business-across-europe

Brexit Partners: ireland-prepares-for-a-no-deal-brexit

Austria: legal changes

Finland: imported goods

Latvia: customs-processing costs

Portugal: British citizens   

Belgium: Brexit Impact Scan  ; Antwerp – Europe’s second-biggest port

Sweden: preparing measures

Netherlands: ferry traffic

Spain: cliff-edge scenario

France: executive orders

Germany: goods traffic

Denmark: hard Brexit

Acknowledgement

Thanks to Joe Mayes at Bloomberg News for sharing the link to their insight into tariffs:

https://www.bloomberg.com/news/articles/2019-03-13/u-k-firms-blast-no-deal-brexit-tariffs-as-too-risky-too-late

John ShuttleworthComment