EU preparations for a no-deal Brexit

The UK Parliament has not approved the Withdrawal Agreement endorsed by the former Prime Minister Theresa May and the other 27 EU Member States (EU27) in November 2018, and without this approval and ratification of the Agreement or another agreement, the UK could leave the EU without a deal. Theresa May asked for, and was granted, first a short extension of the Article 50 period to 12 April and then a longer one. Under a European Council Decision of 11 April 2019, the UK has until 31 October to complete ratification of the Withdrawal Agreement or leave without it. The European Union, the May Government and the Parliament of the United Kingdom all agreed that a no-deal (or ‘disorderly’) Brexit was not what they wanted, but it cannot be ruled out and therefore needs to be prepared for. The EU insists that there will be no renegotiation of the 2018 Withdrawal Agreement. The new Government of Boris Johnson appears to be less concerned about a no-deal Brexit and more no-deal funding has been promised.

If the UK leaves the EU without a withdrawal agreement there will be repercussions for the EU as well as the UK. European Commission preparations to mitigate the impact of a no-deal Brexit began in December 2017, and on 25 March 2019 the Commission declared that its no-deal ‘Brexit preparedness’ programme was complete. The Commission has published 98 ‘preparedness notices’ and 46 legislative measures have been proposed or adopted - for example, legislation amending EU Regulation 2018/1806 will allow short-stay visa-free travel for UK citizens in the EU27 States, on the basis of UK reciprocity (this will also apply in Norway, Iceland, Liechtenstein and Switzerland, which are in the Schengen area).

The Commission’s programme is one of damage limitation in areas that would be most seriously affected and could create problems for the EU27. It includes measures in the financial sector, transport and travel, customs and the export of goods, climate policy, agriculture and fisheries, social security coordination, the ERASMUS and PEACE programmes, cooperation in the export of dual-use items, international trade in services and foreign direct investment. The new measures will, for example, facilitate road haulage, rail and aviation continuity between the UK and the EU27, or compensate fishermen for Brexit-related losses. The measures are mostly temporary (around 9-12 months) and a future EU-UK relations agreement is expected to provide long-term arrangements.

The EU has also taken steps to prepare for a shortfall in the EU Budget if the UK does not honour commitments to payments.

Some industry groups are still concerned that preparations in EU Member States and in many individual companies are not enough to mitigate the impact of a no-deal Brexit at the end of October.

The ‘Irish backstop’ has been a major obstacle to UK endorsement of the Withdrawal Agreement. The EU insists there should be no hard border on the island of Ireland, that the integrity of the Single Market must be respected and that checks on goods will have to take place somewhere, if not directly on the border. There are no details yet as to how this could be achieved. The EU would also help maintain the Belfast/Good Friday Agreement in the event of ‘no deal’ with technical and financial resources, including continued funding and support for the PEACE programme in Northern Ireland.

The Commission has not legislated for residence rights (which are subject to national laws on third-country entry and residence) but has asked Member States to take a “generous approach” to the rights of UK nationals already living in their territories, as long as the UK does likewise. In response, the EU27 have agreed to continue many existing residence, employment and travel rights for a temporary period. In some case, UK citizens have been offered special conditions that other third-country nationals do not enjoy, in particular where UK tourism is important (e.g. Portugal and Spain). Several Member States (e.g. Austria, Bulgaria, Croatia, Denmark, Cyprus, Italy, Malta, Romania and Slovakia) have offered permanent national ‘regularisation’ for UK citizens already living in the country. Most other Member States have implemented at least some citizens’ rights legislation, but not everything currently provided by the EU’s ‘free movement Directive’.

Most Member States (Belgium, Czech Republic, Estonia, Finland, France, Germany, Greece, Hungary, Latvia, Lithuania, Luxembourg, Netherlands, Poland, Portugal, Slovenia, Spain and Sweden) have planned or adopted temporary legislation providing a ‘grace period’ for UK nationals, during which they will need to regularise their status under national immigration laws. Several states (including Belgium, France, Netherlands and Poland) explicitly make this legislation conditional on UK reciprocity. Some Member States have said they will guarantee rights if there is no deal, but have not yet done so formally.

Most Member States have launched information campaigns for businesses and for UK citizens via the British Embassy in their territories, encouraging UK citizens to check their residence status and take any necessary action. They provide online information on government websites, explaining how UK citizens’ legal status might change and how to get the documents they need to stay in the country; most also link to UK Government policy and advice on ‘settled status’ in the UK.

In addition to implementing the EU’s no-deal preparedness legislation, Member States have also made their own plans to reduce the impact of ‘no deal’ on their economy, trade, business, services, transport and a range of other sectors. Many have planned border and customs adaptations, for example. Those with major ports (e.g. Belgium) and significant trade with UK (e.g. the Netherlands) have provided extra border infrastructure and new technology systems, and recruited extra customs or veterinary staff (e.g. France, Ireland, Poland, Netherlands, Spain). Portugal, a popular tourist destination for UK citizens, is planning to open special lanes for UK tourists at airports.

Several things have happened which have added to the Brexit uncertainty: cross-party talks in the UK broke down; it was announced first that the Withdrawal Agreement Bill would be introduced in Parliament and then that it wouldn’t; Theresa May said she would step down as Conservative Party leader on 7 June, and the Conservative and Labour parties did badly in the European Parliament elections on 23-26 May.

Prospective candidates for Conservative Party leader (and probably prime minister) included some who were not averse to leaving the EU without a deal, and others who wanted to rule out ‘no deal’, or renegotiate parts of the Withdrawal Agreement or hold another referendum. The EU maintains its position that there will be no renegotiation of the November 2018 Withdrawal Agreement - although several Conservative Party leadership candidates pledged to reopen talks with the EU. Neither of the final candidates for Prime Minister in the Conservative Party vote ruled out the possibility of a no-deal Brexit. Both the UK and the EU have appointed new leaders: Ursula von der Leyen will take over from Jean-Claude Juncker as Commission President on 1 November and Belgian Prime Minister Charles Michel will replace Donald Tusk as President of the European Council on 1 December. Boris Johnson became the new UK Prime Minister on 24 July.

It is likely that they will all face much the same Brexit scenarios as now: the UK leaves on the basis of the 2018 Withdrawal Agreement, possibly with amendments, or the UK revokes Article 50 and stays in the EU or leaves without a deal on 31 October. Mr Johnson insists the Irish backstop be removed completely from the Withdrawal Agreement, but the EU has consistently ruled this out. He has also said there will be more spending on preparations for a no-deal Brexit beyond the £4.2bn already allocated by the May Government.