May Urged to Prepare for ‘Real’ Risk of a No-Deal Brexit

  • No evidence government is planning contingencies, panel says
  • Failure to make arrangements would be a ‘dereliction of duty’

Follow @Brexit for all the latest news, and sign up to our daily Brexit Bulletin.

U.K. Prime Minister Theresa May must plan for the “real possibility” that she emerges from two years of Brexit negotiations without a deal, according to a panel of lawmakers.

May has warned she is prepared to take Britain out of the European Union with no agreement rather than accept a bad one. That could happen and it would be a “dereliction of duty” not to plan for the consequences, the House of Commons Foreign Affairs Committee said in a report on Sunday.

Theresa May

Photographer: Jasper Juinen/Bloomberg

“The possibility of no deal is real enough to require the government to plan how to deal with it,” said Crispin Blunt, chairman of the cross-party panel. “But there is no evidence to indicate that this is receiving the consideration it deserves or that serious contingency planning is under way.”

A no-deal Brexit could see Britain revert to World Trade Organization tariffs, disrupting the operations of exporters and importers alike. The U.K. would also need to have in place arrangements for everything from agricultural subsidies that are currently funded by the EU to computer systems to track immigration.

Speaking on the BBC on Sunday morning, Brexit Secretary David Davis said the government was making the necessary plans.

May has promised to trigger formal negotiations this month and the scene is set for a testy start, with Britain and the EU already at odds over the cost of exit. The EU puts the bill at as much as 60 billion euros ($64 billion). British Trade Secretary Liam Fox has rejected the notion of paying anything at all as “absurd.”

Read next:

Talks Format

There’s also disagreement on the format of the talks, with Britain wanting to negotiate its future relationship in parallel with talks on departure arrangements, and EU officials saying the latter must be dealt with first.

The panel dismissed a comment in January by Brexit Secretary David Davis that the consequences of not securing a deal were “an exercise in guesswork,” saying that some implications are predictable. These include:

  • Ongoing disputes over the exit bill.
  • Uncertainty for U.K. citizens in the EU and European citizens resident in Britain
  • Trading on WTO terms.
  • A “regulatory gap” as Britain transitions from a system of EU rules to domestic ones.
  • The sudden return of a customs border between Northern Ireland and the Republic of Ireland.

The U.K. is “confident” it can reach a deal with the EU, including a trade pact, but “a responsible government should prepare for all potential outcomes,” the Department for Exiting the European Union said in an email responding to the report. Davis “briefed the cabinet last month on the need to prepare not just for a negotiated settlement, but for the unlikely scenario in which no mutually satisfactory agreement can be reached,” it said.

Blunt said each department should be asked to produce a ‘no deal’ plan.

“Last year, the committee described the government’s failure to plan for a Leave vote as an act of gross negligence: this government must not make a comparable mistake,” he said.

    Before it's here, it's on the Bloomberg Terminal.