Brexit Business Brief | No deal preparations
Published on 31st Oct 2018
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The Chancellor raised government spending on Brexit preparations by £500 million in Monday's Budget. The combined figure for 2018/19 and 2019/20 is now £4.2 billion. Otherwise, the Budget had an absence of specific Brexit-related measures. There was no scheme to help businesses, particularly SMEs, with the cost of Brexit planning (for example, there is a voucher scheme in Ireland).
A new 50p coin to commemorate the UK's exit was announced. The European Commission confirmed there are no plans to issue an equivalent Euro coin.
Relatively unnoticed in the Budget publications was this statement from the Office of Budget Responsibility in its Economic and fiscal outlook at paragraph 1.12:
…this forecast [i.e. the one upon which the Budget was based] assumes a relatively smooth exit from the EU next year. A disorderly one could have severe short-term implications for the economy, the exchange rate, asset prices and the public finances. The scale would be very hard to predict, given the lack of precedent."
With the OBR's words in mind, most of the rest of this e-mail focuses on no deal preparations.
As we wait for the UK and EU negotiating teams to re-engage on the outstanding Withdrawal Agreement issues (i.e. the Irish border), the principal activity in the past couple of weeks has been the increasing preparations for a "no deal" Brexit by the British government.
By "no deal", I mean the UK leaving the EU on 29 March 2019 without an agreed and ratified Withdrawal Agreement, either because the UK and the EU can't agree a deal, or the agreed deal is rejected by the House of Commons.
The UK's "partnership pack"
On 22 October the UK government published a "partnership pack" to "help you support businesses to prepare if we exit the EU without a deal". The pack is on this page; most of the documents on that page are aggregated in this document. The partnership pack covers border issues for importers and exporters. There is nothing on data or employees or intellectual property, for example. So the pack will be useful principally for those moving goods.
More no deal notices
The government has also published 28 more of its no deal notices. That makes 104 so far; they are all here.
The latest notices cover, amongst other topics, providing services including those of a qualified professional if there's no Brexit deal, consumer rights, geo-blocking, sanctions policy, rail transport, and structuring your business.
Yesterday the Competition and Markets Authority published notices on its role in antitrust and its role in mergers if there is no deal.
No deal: data
If there is no deal, the UK needs an adequacy decision from the EU to keep data flowing between businesses. Secretary of State Jeremy Wright told the DCMS Committee last week that he is frustrated that the Commission has not engaged on this:
"We think this should be a relatively straight forward conversation, but every conversation requires two participants and we need the rest of Europe and the European Commission to be prepared to talk to us."
The quickest ever EU data adequacy decision reportedly took nine months, though of course the UK starts from a legislatively-aligned position.
No deal: citizens
Brexit Secretary Dominic Raab confirmed on 25 October that the UK government will not be publishing a no deal notice on the rights of EU citizens in the UK. This had previously been promised by DExEU.
Mr Raab said that "The issue of citizens rights is on a scale and a level of importance and sensitivity which means it will not be done in technical notices but in a different format."
We don’t know when that will emerge. Relatedly, the government has also published guidance on how EU citizens can "provide evidence that you’ve been living here [the UK] if we can’t confirm this through an automated check of UK tax and benefits records". This is in the context of the settlement scheme for EU citizens in the UK.
Reminder: the settlement scheme currently depends on there being a deal between the EU and the UK. The UK guidance above reflects what is contained in the draft Withdrawal Agreement. In the event of no deal, the Prime Minister has intimated that the UK will make a unilateral offer to the three million EU citizens in the UK, but we have no firm details on what that offer would be.
No deal: the borders
The National Audit Office last week published a report on the UK's preparation for no deal, focused on border issues (i.e. ports and airports). It is not particularly impressed by preparations so far, setting out the NAO's opinion that it is now too late to prepare for no deal. The conclusion: "Businesses do not have enough time to make the changes that will be needed if the UK leaves the EU without a ‘deal’". Worth flicking through the opening pages if moving goods across borders.
No deal secondary legislation
As we have covered, in the event of no deal the UK needs to put in place between 800 and 1,000 statutory instruments so that the UK statute book "works" after EU retained law is incorporated into UK law at 11.00 p.m. on 29 March 2019.
The Hansard Society published an analysis suggesting that "45% of the time available to lay the SIs before exit day has now elapsed; but just 9% of the minimum number of SIs the government says are needed for Brexit have been laid before Parliament".
Just to be clear, nothing like that number is needed if there is a transition period after 29 March 2019.
No deal: emergency legislation
The Times reported on 25 October that:
"Theresa May will trigger full-scale parliamentary preparations for a no-deal Brexit in less than three weeks with a slew of legislation to prepare the country for a chaotic departure. Ministers have agreed that a schedule of detailed implementation plans drawn up in secret over the past year across Whitehall will be launched in the second week of November. In parliament, routine business will be effectively suspended and replaced with a rolling programme of no-deal Brexit legislation".
Other Brexit developments
- Brexit and financial services: where have we got to? – The Financial Conduct Authority, speech by Andrew Bailey.
- European Parliament study on Brexit and the audiovisual sector.
- The effect of Brexit on legal services – All-Party Parliamentary Group on Legal and Constitutional Affairs.
- A User's Guide to the Meaningful Vote – House of Commons Library.
- The European Union's negotiating mistakes – Franklin Dehousse, University of Liege.
- Seven ways Brexit could play out – Nick Thody.
The good stuff
By request, here are some of the sources I find useful on Brexit and business. The UK government publishes emails with various Brexit information. It is hard to track them all, but here is DExEU's; here is one for EU citizens in the UK; here is a general one. The European Commission's Brexit Taskforce 50's emails are here.
The UK Parliament's Brexit e-mails are here. The House of Commons Library has had an excellent Brexit; sign up at this address. The Institute for Government also stands out for its indefatigable analysis. The Financial Times publishes a good if gloomy daily Brexit newsletter (subscription only). The Guardian's weekly email is here.
The business lobby groups all publish useful Brexit work. This is most easily picked up at their Twitter accounts: @CBItweets/ @fsb_policy / @TheIoD.
Twitter is a great source of links to detailed Brexit analysis. Email me and I'll send over a list of Brexit Twitter accounts which I follow. The best Brexit podcasts are the BBC's Brexitcast and the London Review of Book's Talking Politics.
How Osborne Clarke can help
- how Osborne Clarke can help you get ready for Brexit and
- our Brexit Insights pages.