The UK has made no progress on the critical issue of the Irish border and failed to articulate what sort of post-Brexit arrangement it wants. The EU therefore plans to issue a warning about a so-called crash out Brexit during the European Council meetings of June 28 and 29. From Bloomberg:
European Union leaders will say next week they’re concerned about the lack of progress in Brexit talks and call for member states to step up preparations in case no deal is reached, according to the first draft of their summit statement…
The leaders will say they’re concerned about the lack of “substantial progress” on the crucial issue of the Irish border. They will also warn that if there’s no divorce agreement before the scheduled departure date of March 2019, there won’t be a transition — the grace period that businesses are counting on for the first two years after the split….
The joint document shows that while some disagreements have been resolved in the areas of customs, sales tax and nuclear material, the biggest areas of dispute remain.
The Financial Times’ account was more pointed:
EU leaders are to call on member states, companies and organisations to step up preparations for a no-deal Brexit amid concerns that the UK has made “no substantial progress” on the Irish border, the biggest sticking point in the talks….
In an unwelcome warning for Theresa May, British prime minister, the summit text says contingency planning for a hard exit in March 2019 must be accelerated….
But frustration is growing in European capitals over the slow pace of negotiations on Ireland and the future relationship. “It is going nowhere and it is clear to everyone,” said one senior EU diplomat, who expected the talks to drag on into the winter…
In what he presented as a call for greater realism by London, Mr Barnier gave a speech on Tuesday in which he ruled out UK participation in the European Arrest Warrant and full access to EU law-enforcement databases. He said this was a result of the British government’s “red lines” on issues such as the role of the European Court of Justice.
“They want to maintain all the benefits of the current relationship, while leaving the EU regulatory, supervision and application framework. And they try to blame us for the consequences of their choice,” Mr Barnier said. “Once again, we will not be drawn into this blame game. It would mean wasting time we don’t have.”
The UK seems particularly upset at being told it will no longer be part of EU security operations. From The Times:
The head of GCHQ made an unprecedented intervention in the dispute with Brussels over post-Brexit security by spelling out yesterday how British intelligence had saved European lives…
It is rare for the head of any of Britain’s three intelligence and security agencies to speak in public, particularly on such a politically charged issue. Mr [Jeremy] Fleming’s comments appear deliberately timed to bolster Britain’s argument as ministers fight back against attempts to block the country from EU security databases and prevent Britain from accessing military aspects of the EU satellite surveillance system Galileo….
Asked about Mr Fleming’s comments, a Downing Street source said that the post-Brexit security relationship Britain was seeking was unprecedented but there were “compelling reasons” for Europe to agree. “Our intelligence capability is pre-eminent in Europe,” the source said. “We are saying if you want an unconditional commitment to security then alongside that we need co-operation. The offer is there and it is in our mutual interest.”
The UK again and again reverts to the same argument, that the UK must get a special deal…and the EU will benefit too! But the Brits simply do not want to internalize that the EU has accepted that they will take losses and have moved on.
Politico provided a high level sketch of some of the consequences of a no deal Brexit. We’ve covered many of these topics before, such as the fact that the sure-to-be-not-completed-on-time customs IT upgrade can’t handle post-Brexit processing volumes. From Politico:
What happens immediately?
- Customs declarations at U.K. ports balloon to 255 million per year from the current 55 million, according to government figures.
- As a result, long queues likely start to build up at entry points around the country. Fresh produce begins to rot as it waits for clearance and roads around major ports like Dover are gridlocked.
- “Just in time” supply chains that require rapid transport of goods break down — including those for heavy industry, carmakers and producers of high-tech goods with assembly plants in the U.K.
- Irish producers of fresh produce also likely face delays using the U.K. land bridge to reach the Continent.
Air travel is another disaster that we’ve discussed before:
What happens immediately?
- All flights between the U.K. and EU27 stop. Seriously. Barring a transition deal, the unthinkable comes true.
- More than 135 million passengers annually fly between a U.K. airport and an EU27 country. That’s about 370,000 passengers per day.
- The U.K is no longer part of the EU-U.S. open skies agreement, meaning that flights to American destinations are also grounded.
- Leisure and business travelers are forced to take the ferry or Channel Tunnel services between Britain and France, leading to skyrocketing demand and delays.
- The transport of transplant organs by scheduled flights between the U.K. and the EU27 is impossible.
More detail from an April article, European Commission Warns of Effects of UK’s Exit from EASA, from AIN Online. Note that the UK is now a member of the EASA through the EU:
If Brussels and London fail to come to an agreement on aviation, EASA’s safety certification will no longer cover British airlines, pilots, cabin crew, aircraft and aircraft part manufacturers, flight simulators, MRO facilities, airports, ANSPs, and medical attests for air traffic controllers. “Type certificates issued by EASA to persons and organizations located in the United Kingdom will no longer be valid in the EU as of the withdrawal date,” stated DG Move, which added that aircraft, engines, propellers, parts, and appliances “will no longer be considered as certified” by EASA.
UK airlines will have to obtain a third-country operator license and a safety authorization from EASA if they want to fly to the bloc…
Not remaining part of EASA will also affect British airlines’ aircraft acquisitions since almost all aircraft leases and financings refer to either EASA or FAA standards of certification and recognition…
The UK government and its civil aviation authority (CAA) have indicated they would prefer to remain a member of EASA, though at the moment the parties have agreed to nothing…
In an analysis published earlier this month, CBI cautioned that divergence from EU aerospace rules would lead to “a regulatory no-man’s land,” with no involvement in rules in either of the two key markets for aerospace—the EU and the U.S.—and would significantly increase compliance costs, particularly if the UK pursued a regime differing from both the EU and the U.S.
The head of the UK CAA, Andrew Haines, unequivocally stated that the country should not plan for a new independent aviation safety system, a view the industry shares. ADS Group, the trade body for British aerospace, believes that it would take 10 years for the country’s civil aviation authority to create the necessary certification infrastructure…
If continued membership of EASA proves unachievable, Haines has vowed, the UK should adopt the existing EASA regulatory system, rather than developing a new framework from scratch..
Still, the UK most likely will want to secure full membership in EASA, including voting rights. The EU, however, might find that politically unacceptable. Another hurdle involves the jurisdiction of the European Court of Justice, a prerequisite for EASA membership but a red line for May.
So much for not being a rule-taker.
We have not discussed the fishing industry much but Richard North has. Back to Politico:
What happens immediately?
The U.K. cuts off access to a 200-nautical-mile zone around the island, known as the exclusive economic zone. British navy patrols the maritime borders to stop EU vessels from illegally fishing in British waters. U.K. fishermen, fish processors and retailers go bankrupt from tariffs imposed by the EU on fish exports and reduced access to the EU market. Germany and Denmark also lose significant sales of fish products, as both countries are among the top five countries exporting to the U.K. EU fishermen may lose their investments in British fleets and companies depending on the rules adopted by the government.
The Politico story covers more cheery topics, like medicines, financial services, and energy.
The EU warning may finally lead to more realistic coverage of the consequences of a crash out Brexit. But Theresa May is spectacularly rigid, so even growing and well warranted panic are unlikely to make a difference.