Britain is severely unprepared for a no-deal Brexit, which could mean chaos on March 29 exit day including food shortages and price increases, ‘secret’ Brexit papers have revealed.
The government has published a document which sets out the implications for business and trade if Britain quits the bloc next month without a deal with Brussels in place.
The papers, drawn up for cabinet, warns almost a third of the government’s most critical no-deal Brexit preparation projects are not on track for completion in time for the scheduled date of EU withdrawal, and warns starkly that as of this month “many businesses in the food supply industry are unprepared for a no-deal scenario”.
Published in response to an amendment tabled by Independent Group MPs Chuka Umunna and Anna Soubry, the papers say the lack of preparation would result in “reduced availability and choice of products” in shops and additional costs to companies.
Umunna said it painted “a disastrous picture of the catastrophe which would befall our country if there is a no-deal Brexit”.
Here are some of the most striking impacts on the UK.
1. The economy will shrink - with some of the poorest areas hit hardest
The document repeated analysis suggesting no-deal could leave the UK economy 6.3%-9% smaller after 15 years than it would otherwise have been, with the worst-hit areas Wales (-8.1%), Scotland (-8.0%), Northern Ireland (-9.1%) and the North East (-10.5%).
The words that came with the numbers were not comforting: “This analysis does not account for any short term disruptions, which would be likely to have additional short and long run economic impacts in an immediate no-deal scenario.”
2. People could panic-buy fruit and veg
Because 30% of our food supply comes from the EU, potential disruption to cross-Channel trade “would lead to reduced availability and choice of products”, the document stated.
The government analysis underlined that while no-deal would not trigger “an overall shortage of food”, because of the time of year Britain risked crashing out of the EU, the country would be “particularly reliant on the Short Channel Crossings for fresh fruit and vegetables”.
The document adds: “In the absence of other action from Government, some food prices are likely to increase, and there is a risk that consumer behaviour could exacerbate, or create, shortages in this scenario.
“As of February 2019, many businesses in the food supply industry are unprepared for a no-deal scenario.”
3. A third of ‘critical’ preparation projects not ‘on track’
Just over two-thirds of the government’s most critical preparation projects for a no-deal scenario – and fewer than 85% overall – were “on track” for completion in time for the scheduled date of Brexit on March 29, it said.
Some of this could be blamed on government “communications to third parties” that did not have “the intended effect” but also because of “prior slippage” to no-deal planning before preparations were sped up in December.
4. ‘Full Schengen checks’ for UK citizens on holidays
Following a no-deal Brexit, UK citizens could find themselves subject to “full Schengen checks” when travelling to the EU, with longer waits at the border and exclusion from the use of e-gates for passport checks, the government document said.
It adds: “This would mean they would no longer be able to use e-gates, and checks to enter EU member states could take longer than they currently do.”
5. Some firms have done little or no planning for no-deal
Around 240,000 UK companies which trade only with the EU would be caught up in customs processes, with a total administrative burden on business from customs declarations of around £13 billion a year.
Goods exports would not enjoy the current “fully free-flowing border” in place at present, with delays expected at the French border for paperwork checks, the document warned.
“The government’s worst-case planning assumption is that, as a result of French checks and lack of businesses readiness, the flow of goods through the Short Channel Crossings (Dover and Eurotunnel) could be very significantly reduced for months,” it said, adding ‘day one’ disruption was unlikely.
Ministers are worried about how little planning small businesses had done.
The document said: “Despite communications from the government, 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.”
6. Farming and the car industry should prepare for the worst
The government document stated that the introduction of tariffs and non-tariff barriers to trade in the case of a no-deal Brexit can be expected to have a “very severe” impact on some UK industries.
The EU would introduce tariffs of around 70% on beef and 45% on lamb exports and 10% on motor vehicles. The impact on UK businesses “would be compounded by the challenges of even modest reductions in flow at the border”, said the document.
It was “impossible to accurately predict the ability of businesses to adapt”, but the risk of no deal is “of major concern” for the car industry, both because of tariffs and disruption to just-in-time supply chains.
7. Northern Ireland’s lights could go out
The document stated that “the cumulative impact from a no deal scenario is expected to be more severe in Northern Ireland than in Great Britain, and to last for longer”.
It warned: “In a no-deal scenario there is an expectation of disruption to closely interwoven supply chains and increasing costs that would affect the viability of many businesses across Northern Ireland.
“There is a risk that businesses in Northern Ireland will not have sufficient time to prepare. This could result in business failure, and/or relocation to Ireland with knock-on consequences for the Northern Ireland economy and unemployment.”
Somewhat alarmingly, the papers add that Northern Ireland is more reliant on the Single Electricity Market with the EU and under no deal the UK may lose some control over electricity in Northern Ireland.
It says: “In the first instance, even in a no deal scenario, the UK
would seek to agree with Ireland a continuation of the SEM, which would minimise impact on exit. This relies on cooperation with Ireland and the EU, which is not within the UK’s gift to unilaterally control or mitigate.”
8. People don’t think no-deal will happen - and it’s a problem
People are not applying for insurance green cards or international driving permits because they assume they won’t need them.
Despite no-deal being the legal default on March 29 should the UK and EU fail to agree a deal or an extension to Article 50, about 55% of adults don’t believe crashing out to a ‘credible’ outcome.
They are, therefore, unprepared as individual citizens, the document said.
People in the UK should be starting “a number of administrative tasks” now if they are planning to travel to or deal with the EU after March, the papers state.
They add: “These range from renewing passports, to applying for a car insurance green card and International Driving Permit to drive in the EU. As of February 2019, despite a public information campaign encouraging the public to seek out the Government’s advice on preparing for a no deal, noticeable behaviour change has not been witnessed at any significant scale.”
9. We don’t have enough time left to prepare...
The document concludes with the rather stunning admission that, despite ministers stepping up no deal preparations in December, the UK is still unprepared because of the “short time remaining” before March 29.
It ends: “Even where it can take unilateral action, the lack of preparation by businesses and individuals is likely to add to the disruption experienced in a no deal scenario.”
10. And we don’t know the half of it yet ...
Independent Group Anna Soubry, whose amendment forced the government to publish the papers, said this document is “just a summary” of the full no deal papers shown to cabinet ministers.
It came as Prime Minister Theresa May signalled for the first time that Brexit may be delayed.
Speaking in the Commons on Tuesday, May said a meaningful vote on her deal would be held by Tuesday March 12.
She added that, if MPs did not back her plans for the UK’s divorce, a vote on whether to extend the March 29 deadline could be held. If MPs back a delay, the government could then seek an extension of Article 50.
MPs could also get the chance to vote on whether to leave without a deal, she said. However, there is not thought to be a majority in favour of leaving the EU without a deal.