The Financial Times reports EU Prepares Five-Day Plan in Case of No-Deal Brexit.
Similarly, Bloomberg says EU Envoys to Discuss Emergency Preparations.
Neither article said much of anything beyond the title and subtitle.
Eurointelligence had much more interesting commentary.
> As a no-deal Brexit emerges as a serious possibility on the political horizon, the EU-side is making no secret of ramping up its own contingency preparations.
> The political difficulty here for the EU side is clear. Make the contingency planning for a hard Brexit too comprehensive and too conspicuous, and you feed into a dynamic where no-deal is established in the mind of the public as a workable option —and perhaps even as the best or only realistic one. This would then reduce the public appetite for politically difficult concessions necessary for a final deal.
Does Planning For No-Deal Make No-Deal More Likely?
Here are the pros and cons.
- If we plan for a no-deal we can diffuse all the “lurid stories about a break-down of air traffic, empty foodshelves in supermarkets and a shortage of essential medicines as a consequence of a crash-Brexit” that currently permeate the UK airwaves. This will take the wind out the fearmonger’s sails.
- If we discuss the alleged disaster scenarios enough, both sides will work towards a deal to prevent those disaster. After all, government plans seldom achieve what they are supposed to.
Right now, argument number one seems to have the upper hand. If the EU will not budge, May can always wash her hands an moan at the stubbornness of the EU.
She might be able to give in on minor points, as might the EU, but the recent meeting in Salzburg where the EU thoroughly rebuked May’s Chequers proposal shoved both sides into a corner will take a lot of time to heal, and the clock is ticking.
Let’s return to Eurointelligence for possible ways out.
Two Ways Out of the Brexit Impasse
> We keep hearing the phrase from commentators and politicians that there is no majority for a hard Brexit in the House of Commons. At the Labour party conference, Jeremy Corbyn underlined his opposition to such an outcome and promised to do whatever it takes to stop a hard Brexit. His preferred method is a general election. This is indeed one of two plausible outcomes. Labour would campaign in favour of a customs union agreement. In that case, Labour’s commitment to a referendum would end because it is contingent on no election being held.
> Could there be a deal with Theresa May in power? A threat to call elections remains her strongest card. Under the Fixed Term Parliaments Act, the prime minister can no longer simply call elections when it pleases her, but has the power to initiate the process if she manages to get a two-thirds majority in the House of Commons. Her Chequers proposal is opposed by two factions in her own party – the proponent of a Canada deal and those in favour of a customs union and/or Efta/EEA membership. Both sides have the numbers to block any agreement.
> The real political problem for May is the EU’s open hostility towards Chequers. It has unwittingly strengthened the position of the Brexiteers in their demand for a Canada-type deal. May is resisting this option for now because an FTA would necessarily trigger the Irish backstop and create a customs border inside the UK.
> The Times reports this morning that there are reservations inside the cabinet about her strategy to confront the EU with a take-it-or-leave-it strategy and take this to the brink. The opposition comes from cabinet ministers who are in favour of a Canada deal. These ministers include Dominic Raab, Jeremy Hunt, Michael Gove and Sajid Javid – four of the five most important ministers.
> Rudd said in an ITV interview yesterday that there are about 40 Tory MPs, herself included, willing to block a Canada-deal, which means it would not carry a majority in the parliament. But we note that her statement about a deal creating its own political dynamics also applies to her own position. If May were to conclude, at the end of the day, that a Canada deal is the only option to prevent a cliff-edge, and if she can secure some technical fudges on the border, then a re-branded Canada deal might be a way forward. To confuse everybody, it could be called Chequers-Plus.
Time Is About to Expire
The problem with all of these deals is not only do the Tories have to get their act together, The EU has to agree with it.
There may indeed be elections. And it would not take much to trigger them. But time will have expired.
The EU would extend the clock to work out minor details, but we are essentially taking about referendums and deals that even a new government might not be able to deliver on for months, at a minimum.
Irish Sword
The EU would not deal with May’s proposal on Ireland. It demands a hard border. May’s government only survives now because the DUP (Northern Ireland MPs) back her because May insists on no border.
For months, Eurointelligence expected a “fudge”, a crafted statement that pushes the decision to a later time. With the hard rebuke in Salzburg, that chance may have flown out the window.
A Canada deal will require a hard border, or as Eurointelligence discusses a Chequers-Plus fudge arrangement.
Bottom Line
As long as the EU believes it will remain relatively unscathed (it won’t), and as long as contingency plans are in place to stop complete silliness (e.g. no flights between the UK and mainland Europe), the odds of a hard Brexit will keep rising.
Planning for that will increase the odds.
There may be a “plan on the table” but no one seems to like it.
By the way, this is excellent news. The UK desperately needs to move away from the EU nannycrats. A hard brexit would allow the UK to cut its own trade deals, make its own corporate tax plans, and it would immediately stop sending billions of Euros to the common slush fund.
Related Articles
- No Deal Brexit Odds Rise: UK Thoroughly Rebuked at EU Conference in Salzburg
- Disaster in Salzburg: Brexit Fog Lifts, Reveals More Fog
Mike “Mish” Shedlock
There can be a “hard border” that is completely open using smart customs procedures like large companies doing their customs at the factory inside UK with dedicated customs official assigned to the factory and middle-sized and small companies and individuals bringing over 500 pounds worth of stuff to UK doing customs with local customs officials in their own city in UK after first self-reporting through a website etc.
Keep the border between Ireland and Northern Ireland open with this smart customs procedure and giving individuals 500 pound customs free allowance.
Just have some spot checks at the border and levy fines if someone has not self-reported.
There will be some customs evasion but it will be much more cheaper than staying chained to EU.
Also Ireland is outside of Schengen like UK so there will be NO hordes of migrants coming through that open border because Ireland also checks everyones ID before letting them into Ireland.
What kind of trade deals will the Brits try to negotiate after separation from the EU ?
Since trade with the continental EU will certainly take a short-term hit, the immediate Brit negotiating position will be weak. And the whole Brexit debacle suggests that the UK Political Class are not good negotiators. It would be an interesting experiment if they adopted Mish’s proposal for the US — unilaterally eliminate all tariffs on imports. Then there would be no need for negotiations, and it would let the rest of the world see if the theory that this would make the Brits richer is borne out in practice.
There would be some related issues. Would the post-separation UK also have to remove non-tariff barriers, such as the “No Curved Bananas” rule? Would they have to allow unilateral free movement of people as well as unilateral free movement of goods?
Interesting how the “No Curved Bananas” rule is still believed by some people, but it’s a myth.
Not exactly a myth. Although the regulation that disqualified bananas with “abnormal curvature” from getting the highest quality classification has apparently been repealed by the EU.
UK imports much more products from EU than UK exports to EU so it would be in EU’s and especially Germany’s and France’s interest to have a nice deal quickly with UK.
However since WTO rules are now much better than trade rules were in earlier years the benefit of being in EU is much smaller today than previously so UK can manage fine with WTO rules.
May is dreadful and clueless as a politician so she needs to go.
ML1 wrote: “May is dreadful and clueless as a politician so she needs to go.”
That is the problem right there. The UK Political Class does not have a good track record. Despite Mrs May’s dismal performance, no-one in the spineless Conservative Party will challenge her. UK politicians chose Mrs May as Prime Minister.
UK politicians got the UK into the EU, and then messed up membership of the EU, and are making a dog’s breakfast of exiting the EU.
But somehow, after separation, those same London politicians are going to turn into George Washingtons and unite an almost evenly divided polity? That seems to be the triumph of hope over experience.
The reason Brexit happened was millions of Eastern Europeans moving to UK and taking jobs from Brits at low wages and lowering the wages of Brits in general because companies could pay less because millions wanted to come to UK to work.
Another reason for Brexit was Merkel’s welcome of millions of Migrants to EU which Merkel had NO RIGHT whatsoever to do but she pressured other countries to keep borders open and over a million ended up in Germany and Merkel also pressured EU through Druncker to create an asylum seeker burden sharing system from Italy and Greece to around EU that lured more people to come since it guaranteed Syrians and Eritreans would NOT be stuck in Greece and Italy even if they were registered by the uninterested bureaucrats in Italy and Greece but would most likely get to welfare paying EU countries.
UK was NOT forced to allow migrants come freely to UK because UK is out of Schengen area so it has border controls but once migrants get residence permits from other EU countries they would be free to move to UK thanks to EU freedom of movement just like millions of Eastern Europeans have done.
Therefore UK will NOT be allowing free movement of people because that would defeat large part of the purpose of Brexit.
The reason Brexit happened are similar to why Trump was elected aka large flows of migrants (illegal immigrants and asylum seekers) and large imports of low wage immigrants (H1B’s, H2B’s, family migration where 1 can bring about 50 people by bringing his sisters and brothers and their wives and husbands and their kids).
It has been over 2 years since the British people chose Brexit. It goes to show why no European country should have agreed to be a part of the EU, in the first place.
The British People still thinks The British Government is somehow there to serve them. They’re not. Never have been.
If “The British People” truly had decided to leave, they’d just leave. Then and there. Walk out, see what happens, then adjust to the new situation as it unfolds.
Instead, all they did was grant yet more power and influence to the same old hacks they have let themselves be beholden to since about forever.
The world is moved forward by competent individuals and voluntary groups finding ways to route around current roadblocks. Not by mediocrities “planning”, “negotiating” and “voting over” and “deciding” what others should do.
They have to push to the brink of hard Brexit in order to force the calling of a new referendum, one the British government and their masters in Brussels will ensure is won by Remain. At that point, all these silly rules about how withdrawal can’t be reversed will be magically waived and Britain remains in the EU. This has been the plan since June 2016.
So what are the odds of a hard brexit, and tumbling uk £..vs € .?
Well, on unibet, you can get 3 x your money, if the £ is equal or lower than the Euro on or before 30/3/2019 = the brexit exit date…
great deal, currently at 1.12 € , so all it takes is a 12 % drop in the next 6 months..
hmmm – so gold/silver is actually paying interest as the £ drops against real money.
I love those barbaric relics…..
What about puts on EWU?
Yes. Some of the language out of the EU also comes across as fascist. Very unpleasant people.
Social Democracy never were anything more than fascism rebranded with an overbearing Swedish smile.
Worked well enough as long as the initial generation of altruistic idealists held the reins, but lacks any form of protections against the unbridled ambitions of the MeFirst career climbers that inevitably follow.
Lastly, Ireland had 2 votes on the Lisbon treaty. One statement was that Tax decisions would be sovereign. A week or 2 back Junker said they wanted to have Tax decisions by majority voting. Think about that a moment.
Ireland will lose control, as it did with Apple tax decision.
Let’s see what happens.
Junker also said the EU is now large enough and powerful enough to impose it’s will on others. It then cocked a snoop at Trump on Iran. This thinking will lead to some Brexit conflict and force Ireland to do as it’s told on tax. Irish memories are short but they should tread carefully. They will be more a vassal than they were under the British – all that matters in the EU now is the French-German axis.
If Brexit is a success I hope the Irish see sense.
Macron is pulling the strings. There will be no deal but an offer to go back in at a later date imho. French minister recently said Chequers would be suicide for the EU.
Bigger picture. I’m still thinking March 2019 will be the straw that breaks the markets back. Run up after mid-terms then a topping event and Spring 2019 stress will create an opportunity for a few bubble popping moments. Just imho.
Southern Ireland – if you want to see doom-mongsring TV go there. Just returned. Couldn’t believe the negativity on the TV. How anyone can watch it is beyond me. Channel after channel. Brexit, Northern Ireland, Border, Trucking problems, Housing Crisis, Political shenanigans/corruption, after 5 channels of crap finally a program about predicted 300M deaths possible from flu pandemic.
I began to wonder if it’s on purpose.
Those whose privileges and socioeconomic positions are solely rooted in serial invention of imaginary Hobgoblins, will respond to all perceived threat by inventing more of them. After all, it’s the only thing their incompetent selves are capable of.
It appears that the EU now favors hard Brexit. They must surely know they are undermining May by refusing to endorse her deal.
It can – but after the rebuke, May again stated no deal is better than the deal the Eu offered. I think both sides do not understand the resolve of the other. That miscalculation lends itself to no compromises.
In litigation you see that over and over again to everyone’s detriment but the lawyers.
Could the report of EU preparing for hard Brexit be another ploy to pile pressure on May? One cannot put anything past politicians, bureaucrats, regulators and central bankers. This pernicious cabal is just capable of doing anything to further their case (remember WMD in Iraq). In this case the EU’s only game plan is to ensure Brexit does not succeed due to obviously visible countries at the exits waiting to see if it succeeds. If Brexit succeeds it is game over for the EU.