EU Holds Emergency Meeting to Prepare for No-Deal Hard Brexit

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.

1. 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.
2. 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

1. No Deal Brexit Odds Rise: UK Thoroughly Rebuked at EU Conference in Salzburg
2. Disaster in Salzburg: Brexit Fog Lifts, Reveals More Fog