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Merkel warns of need to prepare for No Deal Brexit

Economic growth
By Paul Hodges on 05-Jul-2020

Most people missed the fact that last Tuesday was the last possible date to delay the UK’s exit from the EU at the end of the year.  Yet as Germany’s leader, Angela Merkel warned on Wednesday:

“To put it mildly, progress in the negotiations has been very limited. I will continue to press for a good solution. But we in the EU and also in Germany must and should prepare for the event that an agreement is not reached after all.”

The UK government has also announced that their top negotiator, David Frost, is to become the country’s National Security Adviser. This is clearly a signal that the Brexit negotiations are not expected to yield great results – if they were, then there would be no question of Frost also taking on such a critical role as Security Adviser.

The decision to leave before any deal has been finalised is very serious for businesses and individuals.  The UK government has already begun to confirm some of the new rules that will apply from January.  For example, if you have a business, travel to Europe or buy/sell products and services:

  • Preparing your business. Companies will need to make customs declarations to move goods into and out of the EU27 countries from 1 January 2021
  • Travel to the EU27. There will be new rules to travel to the EU, or to Switzerland, Norway, Iceland or Liechtenstein. Driving licences and insurance will also be affected
  • Living and working in the EU27. You may need to register or apply for residency. You should check that you’re covered for healthcare
  • Staying in the UK if you are an EU27 citizen. You need to check if you need to apply to the settlement scheme if you or your family are from the EU, or from Switzerland, Norway, Iceland or Liechtenstein

Similarly, there will be major new paperwork requirements for trade with N Ireland.  This is because it will remain part of the Single Market, even though the UK has left.

Of course, all this, and the need to employ 50,000 new Customs agents to police the system, is completely opposite to the promises made at the time of the referendum. Michael Gove, now a senior minister in the UK government, assured voters then that:

“The day after we vote to leave, we hold all the cards and we can choose the path we want.”

And Liam Fox, who as Trade Secretary was responsible for opening negotiations with the EU promised:

“The free trade agreement that we will have to do with the European Union should be one of the easiest in history.”

Those of us who have actually been involved in trade negotiations knew that this was all wishful thinking.  We also knew that most people involved in business today have no experience of the difficulties companies faced before the Single Market and Customs Union began in 1993.

This is why, with some colleagues, I helped to set up www.ReadyforBrexit.co.uk to help provide the detailed information that businesses will need from January.  As the chart shows, it focuses on all the key areas where detailed preparation is essential.

There is now very little time left to prepare. And finding the necessary time will be even more difficult, due to the disruption caused by the pandemic. But sadly, it seems that there is very little choice. It is now critically important, as Merkel warned, to begin preparing for a No Deal Brexit.