Brussels urges contingency plans for no Brexit deal

With the deadline for a Brexit deal between the UK and the EU pencilled in for October, Brussels is not taking any chances if no agreement is reached.

In a 16-page document penned by the European Commission, the Brussels executive posits two scenarios while urging member states to prepare for the worse.

It warns that no deal could result in transport between the UK and the EU being “severely impacted” and customs controls at borders could cause “significant delays”.

In the best-case scenario, a Brexit deal is reached by October. This will result in Britain’s withdrawal from the EU on 30 March 2019, followed by a 21-month transition period.

During this period, EU rules will continue to apply to and in the UK, although Britain will no longer take part in the bloc’s decision-making process.

The period will also be used to reach an agreement on the future relationship between Britain and the EU.

But the Commission is not taking any chances and has urged players within the EU to prepare for a scenario in which no withdrawal agreement is reached or fails to be ratified in time by both parties.

If this happens there will be no transition period and EU law will cease to apply to and in the UK on 30 March next year.

The consequences will include no specific arrangement in place for EU citizens in the UK, or British citizens in the EU.

It also means that border checks have to be introduced and EU rules and tariffs applied on the basis that the UK would then be considered a third country.

The no deal scenario would mean that trade between the UK and the EU will be regulated according to the ruled of the World Trade Organisation. “In particular, in heavily regulated sectors, this would represent a significant drawback compared to the current level of market integration,” the Commission cautioned.

The Brussels executive has called on member states and EU institutions to have contingency plans in place for the worst possible outcome.

“[This] is not a sign of mistrust in the negotiations… however, the outcome of negotiations cannot be predicted,” the Commission said.

Getting into some of the aspects that require attention, the Commission reminded member states that EU pharmaceutical law required the marketing authorisation holder for a medicine to be established in the EU. It also noted that medicines manufactured in a third country should undergo specific controls upon importation.

“Marketing authorisation holders and actors in the supply chain have to prepare for this situation, in particular by ensuring that the necessary testing facilities are available in the EU,” the Commission said.

On financial services, the Commission underscored the fact that passporting rights obtained by companies with a UK base will “cease to exist after withdrawal”.

This means that the provision of financial services from the UK to EU27 will be regulated by the third country regimes in EU law and national legal frameworks of the respective member states.

The Commission warned there will be no single market access and urged operators in all financial services sectors to prepare for this scenario if they did not want disruption in their current business model.