Brexit and a Report by the UK Government on the Implications for Business and Trade of a "No Deal" Exit on 29th March 2019
On 26th February 2019, the UK Cabinet Office published a 12 - page report on the current state of play in preparing for a "No Deal" exit at 11pm UK time on 29th March 2019 ( currently "exit day").
The report has something of the tone of one of those uncomfortable school reports which says that the student works quite hard but could do better.
On the state of "Government preparedness activity", whilst the Report indulges in some self-praise for its "very significant efforts" to prepare for a "no deal" scenario, it also goes on to say that, in February 2019, UK Government Departments reported "being on track for just under 85% of no deal projects but, within that, on track for just over two thirds of most critical projects". This is with just over a month to go until exit day.
The Report , however, confirms and re-iterates the decision taken in May 2018 by the UK Government "to apply a short - term "continuity approach" to no deal plans, meaning that it would take unilateral action to maintain as much continuity as possible in the short term, irrespective of whether the EU reciprocated".
On "third party preparedness", the Report states quite plainly that " there is little evidence that businesses are preparing in earnest for a no deal scenario, and evidence indicates that readiness of small and medium-sized enterprises in particular is low". The example is given of the low take -up in EORI ( Economic Operator Registration and Identification) number registrations, which businesses would need in order to be able to complete the necessary UK customs documentation for goods that they are importing into the UK - as of February 2019, only 40,000 EORI number registrations, against an estimate of around 240,000 EU-only trading businesses, had been effected.
The Report refers to the work of the EU Commission , which has published three batches of "no deal" legislation and preparedness notices. These unilateral contingency measures deal with urgent issues on aviation, road haulage, financial services and potentially citizens' but are said to be of only a temporary nature and leaving important gaps ( particularly in the area of data flow between the EU and the UK).
The section of the Report dealing specifically with "the anticipated effects of a no deal scenario" does not make for easy reading - focussing on general "Economic " effects ( with a UK economy 6.3-9% smaller after around 15 years than if there were no Brexit, with significant variations between different parts of the UK); border issues, including inbound and outbound "roll on, roll off" road traffic; tariffs ( with a case study on the automotive industry) , Northern Ireland ( with a case study on the Single Electricity Market) ; service sectors ( with case studies on the legal and financial services sectors) ; and regulated, integrated and just-in-time industries ( with a case study on the chemicals sector); data flows; citizens; and the impact across the UK ( with a focus on the food and drink sector).
The Report is written in the elegant style of the British civil service but the call to avoid complacency is clear.
