No-deal Brexit: experts on what the UK government’s advice means
Courtesy of Ioannis Glinavos, University of Westminster; Alan Shipman, The Open University; Andrew Gunn, University of Leeds; Feargal Cochrane, University of Kent; Helen Carasso, University of Oxford; Philip Crilly, Kingston University, and Stephen Roper, Warwick Business School, University of Warwick
The UK government is releasing a series of “technical notices” outlining what might happen if the country leaves the European Union without striking a deal for its future relationship with the bloc. While Dominic Raab,Secretary of State for Exiting the European Union, stressed that this scenario was far from the preferred option, he added that the country needs to have a “a sensible, responsible and realistic conversation about what a no-deal situation really means in practice”.
Here’s what the technical papers reveal about what a no-deal Brexit Britain might look like.
Stephen Roper, professor of enterprise, University of Warwick
Supply chain disruption at the Channel ports seems almost certain in the event of a no-deal Brexit because of the customs and border checks that will have to be introduced. Firms that do not currently export or which only export to the EU will be worst off.
Currently, for most goods, this requires little or no customs paperwork. This changes immediately if there is no deal and, here, the government’s advice in the technical papers is helpful in outlining the steps necessary before March 29 2019. Any preparations impose costs on businesses. But many of these may be prepared to wait and see what emerges from the Brexit negotiations.
For firms which currently export outside the EU a no-deal Brexit will bring few surprises. In the case of no deal you simply fill in exports paperwork for sales in France in the same way that in the past you did for the US or China. This, of course, costs you time and money which French consumers may or may not be prepared to pay for. Customs duties may also be payable.
For firms trading across the Irish border, the government’s advice is much less helpful. Here, the key suggestion seems to be to contact the “Irish government about preparations”. But who firms trading across the Irish border should contact is not clear. And, even if firms do find the right person in the Irish government, would they have any answers?
Can we talk about Northern Ireland?
Feargal Cochrane, professor of international conflict analysis, University of Kent
I am a nervous flyer – borderline phobia level – though being an academic I have to suck it up and get on the plane on a regular basis. But I always know where my emergency exits are, how many rows back my seat is (it matters in terms of the crash survival stats) and I always listen to the safety demo while everyone else is squeezing out one last tweet from their phones before take off.
So I was very excited about the release of the UK government’s “no-deal” technical impact papers about what to do if the worst should happen – especially the paper dealing with a hard border in Ireland. But, on the day of release, no such paper emerged. Given that the Irish border is one of the most prominent obstacles in the Brexit negotiations and the most talked about in terms of the implications of a no-deal outcome, this was a little surprising and disappointing.
The closest these papers came to being relevant to the Irish border issue, was in discussing post-Brexit trade. After the usual blether about commitments to the Belfast Agreement and the deep and meaningful relationship between Britain and Ireland, the UK government’s advice to its citizens in Northern Ireland affected by a no-deal outcome was as follows: “We would recommend that, if you trade across the land border, you should consider whether you will need advice from the Irish government about preparations you need to make.”
This has gone down like the proverbial bucket of cold sick in Ireland. Manufacturing Northern Ireland condemned the advice as “madness”, while Hilary Benn, chairman of the House of Commons Exiting the European Union Committee, called it an “abdication of responsibility”. The nationalist SDLP’s Brexit spokesperson Claire Hanna, claimed that the reason there was no technical paper on a no-deal hard border in Ireland was because writing one would force the UK government to confront the level of damage this would inflict.
The pilot of the plane has effectively shrugged their shoulders and said: “Hey I don’t know how to fly this thing, call that guy in Aer Lingus.” Even the crappiest airline tells you where the life jackets are and how to fit the oxygen mask, but so far as Air UK is concerned, over a no-deal Brexit in Northern Ireland, it’s a case of BRACE, BRACE, BRACE.
Ioannis Glinavos, senior lecturer in law, University of Westminster
The government has finally offered some clarity on what the loss of financial passporting means in practice in the case of a no-deal Brexit. Passporting allows financial services companies within the EU single market to operate across the bloc without requiring a licence in each country. What the relevant government paper reveals is that instead of a no-deal Brexit giving more options to a post-2019 Britain, it demotes it to a rule taker, hostage to the EU’s wishes. This loss of control is clear from the document’s oft-repeated admission that while the British government will do whatever it can to ensure continuity for those offering services to the UK, it cannot ensure the same for those exporting financial services. While this outcome could be expected, this stark admission is novel and noteworthy.
A no-deal outcome means a closed door to UK financial services exporters and exposes them to costs, both in seeking alternative avenues to operate by opening branches in the European Economic Area and in settling breach of contract claims, when alternatives are unavailable. Considering this, one key piece of information missing from the papers released so far is whether and how the government intends to compensate British businesses for the consequences stemming from a potential failure to reach a deal. Admitting potentially costly results of a no-deal Brexit, yet offering nothing but the hope it won’t happen, will not appease Britain’s biggest export industry.
Alan Shipman, lecturer in economics, The Open University
The relative calm with which UK financial services have greeted the possibility of a no-deal Brexit does not assure their high street customers there won’t be adverse impacts. UK finance is dominated by “wholesale” investment bank and financial market operations, concentrated in the City of London. The City’s decades-long global focus stops it from seething about the possible loss of some EU trade. And, even with no Brexit deal, the City can expect to keep much of its international foreign exchange, equity, bond, futures, options, corporate finance and wealth management business, as the EU seeks to avoid both the disruptions that would attend an overnight attempt to capture these, and the long-term damage that an oversized financial sector may have inflicted on the UK’s real economy.
While households benefited indirectly in the past from retail banks’ close links to wholesale operations, which could sometimes lower borrowers’ costs and raise savers’ returns, these have already been weakened by a post-2008 crisis separation of the two. Regulatory intervention has also stopped banks from cross-subsidising better deals for typical households by exploiting (among others) small business borrowers and high-cost credit users. And the cheapening of mortgages by bundling the sub-prime with the solvent blew up spectacularly in 2008.
Banking, insurance and even fund management services remain largely confined within national borders, the UK having chosen to leave when the EU is still far from unifying its market for them. A no-deal Brexit may add to the cost and complication for those making or receiving payments (including pensions) across the new EU border. But for most, the impact on what flows into their bank account (and what they need to insure against) – due to impacts on other sectors of the economy – will be noticed far more than changes in the way those services run.
Philip Crilly, pharmacy teaching fellow, Kingston University
The secretary of state for health and social care, Matt Hancock, told pharmaceutical companies to stockpile an extra six weeks’ worth of medicines to ensure a seamless supply in case no deal is reached on Brexit. There are already problems getting a supply of some drugs, so any restrictions on supply could make things much worse. GPs and pharmacists will need to work closely to find alternative drug options for those affected.
There are many high-risk conditions in which patients must remain on a specific brand of drug, such as some epileptic medications, so discontinuing the drug isn’t an option, or patients need to be weaned off that drug slowly and started on a new one well before any stock outages occur. Ultimately, a GP and pharmacist body needs to come together to draw up a list of high-risk conditions and high-risk drugs and these must be prioritised to ensure that the drug supply doesn’t stop.
Universities and research
Andrew Gunn, researcher in higher education policy, University of Leeds, and Helen Carasso, course leader, MSc in Higher Education Policy, University of Oxford
> [The] government will need to reach agreement with the EU for UK organisations to continue participating in Erasmus+ projects and is seeking to hold these discussions with the EU.
This indicates there is no guarantee UK students would be able to participate after March 2019. This may create difficulties for universities, for example where a language degree involves a placement in Europe as part of the course.
Nevertheless, more students and staff from elsewhere in the EU come to the UK, compared to the number who go the other way – so it is likely that universities in the EU will be keen to find a way to keep that option open after Brexit.
Another issue is that UK researchers may be unable to access EU funding – such as the Horizon 2020scheme which is a significant funding source for UK research. The chancellor has already guaranteed funding for all successful projects submitted to the EU prior to exit day, for their full duration. But this guarantee only covers funding for UK participants, not their European collaborators. This may present difficulties where a UK body is currently responsible for distributing funding on to non-UK partners, if they no longer have access to this money.
Ioannis Glinavos, Senior Lecturer in Law, University of Westminster; Alan Shipman, Lecturer in Economics, The Open University; Andrew Gunn, Researcher in Higher Education Policy, University of Leeds; Feargal Cochrane, Professor of International Conflict Analysis, School of Politics and International Relations, University of Kent; Helen Carasso, Course Leader – MSc in Higher Education Policy, University of Oxford; Philip Crilly, Pharmacy Teaching Fellow and PhD student (Digital health), Kingston University, and Stephen Roper, Professor of Enterprise and Director of the Enterprise Research Centre, Warwick Business School, University of Warwick