Preparedness and Contingency: The Commission Starts to Plan for a No-Deal Brexit

Salvador Llaudes (Elcano Royal Institute)

Chequers was supposed to be a turning point in the Brexit negotiations. It has indeed been so, although not in a completely successful way for the British Government. Since then, the political situation in the UK has reached another level of complexity, including the resignations of two key Brexiteers who were part of the Cabinet: David Davis and Boris Johnson, Secretary of State for Exiting the European Union and Secretary of State for Foreign and Commonwealth Affairs respectively.

At least (and after two years) the Cabinet finally seems to be united behind Theresa May. That being said, the Prime Minister has just decided to “take control” of the negotiations herself, sidelining Dominic Raab, Davis’ successor. The main idea behind this decision is to try to avoid the disaster: a “no deal scenario”. However, the probability of missing the October (or even December) deadline with no agreement with the European Union increases day after day. May thinks that if she leads the negotiations this will be less likely. She may be right.

But she might be wrong. And even if she is able to secure an agreement with Barnier, she must then “sell” it internally. It is now likely that the Cabinet will not pose further trouble to her. She can surely play that card. But what is not so clear is if she will be able to convince the Parliament. The Tory party is deeply divided over the Brexit issue (the same way it has been divided regarding Europe for the last 20 years or more). Even the Labour party has no clear position towards Brexit. Consequently, there is currently no “positive” majority for either a Hard Brexit, a Soft Brexit or a “Chequers Brexit”.

Hard Brexiteers (including Davis, Johnson and, also, Rees-Mogg) know that because of that division in the Parliament now they have a chance to defeat the Prime Minister, especially once they have no further commitments in the Government. They may well do as much as possible for that outcome to happen, including trying to force the UK go into the no-deal path. The latest developments in the UK Parliament are a clear proof of their efforts, but the real test will take place during the Tory Conference in Autumn. May’s ability to keep the party united will be under examination.

Obviously, the European Union is not naïve. The Task Force on Article 50 negotiations with the United Kingdom (Barnier’s team in the Commission) is well informed about all these developments and is therefore preparing itself for very difficult months to come, which might include a crash in the negotiations. Also, even if the White Paper (published only a few days after Chequers) is a step in the right direction towards reaching an ambitious deal, the EU’s reaction has been somewhat cold. The EU has underlined once again the indivisibility of the four freedoms and, thus, the impossibility of separating goods from services (and also people). In economic terms it’s Canada or Norway. There is not much more on offer from Brussels. And the UK does not want to make this choice.

It is in this spirit that the Commission has just published a document on the preparations that have to be done for the withdrawal of the United Kingdom from the European Union on 30 March 2019. Two scenarios are foreseen. The first (and ideal) one would entail the ratification of the Withdrawal Agreement before 30 March 2019. EU law would remain in place in the UK until the end of the transition period (or “implementation phase” as the UK prefers to call it), on 1 January 2021. The second one would mean a disorderly Brexit and therefore citizens, enterprises and every single actor with interests at stake in it would face the so-called “cliff edge” on 30 March 2019.

The mere fact that the European Union is publishing a document like this one raises the attention of both public and private actors. This means not only that everyone has to be prepared for any eventuality (which is normal in every single negotiation), but also that the probability of a no deal scenario has lately increased in a substantial way. Both parts in the negotiation should be careful of self-fulfilling prophecies that are in nobody’s interest, especially when a no-deal scenario would entail a very problematic issue (probably the most important one, Irish border aside): a collapse of trust between the United Kingdom and the European Union.

The negotiations will last for a few more months. Nothing is decided yet. Nevertheless, we should not underestimate the possibilities of an “accident” that could end up in a failure to reach an agreement. And let’s face it, neither the United Kingdom nor the European Union can allow themselves to reach that point, less so in a world of more strongmen (Trump, Putin, Erdogan, Xi Jinping) and less appetite for global governance and European values (such as freedom, democracy and the rule of law). Both the UK and the EU are prisoners of geography and therefore it is of the essence that cooperation between the two sides remains as high as possible. We really need to avoid the collapse in the Brexit talks. Otherwise we will pay a high price.

Salvador Llaudes is an Analyst at the Elcano Royal Institute and an adjunct professor at the IE University. He has been a Visiting Scholar at the College of Europe in Bruges and the Institute for European Studies at the Vrije Universiteit Brussel. He has also been a Visiting Researcher at the Institut d’Études Européennes (Université Libre de Bruxelles). He has served as an external expert to the European Economic and Social Committee and to the Institut für Europäische Politik. He has previously worked at the Centre for European Policy Studies (CEPS) in Brussels, and in the Cabinet of the Secretary of State for the European Union (Spanish Ministry for Foreign Affairs and Cooperation). He is also a frequent contributor to the Spanish and international media.