- Preparations for "no deal" scenario
Fruitless Brexit negotiations and the internal political cacophony in the U.K. suggest the country is moving full steam ahead towards a ‘no deal’ scenario. The U.K. government published a 24-page How to Prepare if the U.K. Leaves the EU With no Deal document on Aug. 23. In this document, the medical, financial and agricultural sectors were addressed.
Among the many changes, if a 'no deal' Brexit is reached, the U.K. could face the following:-
- According to the government paper, the cost of card payments between the U.K. and EU would "likely increase" and would not be covered by a ban on surcharges.
- Businesses who trade with the EU need to start planning for new customs checks, and they could also be subject to payments for new software and/or logistical help.
- British people living elsewhere in Europe could lose access to U.K. banking and pension services without EU action.
- U.K. organic food producers could face new hurdles in exporting to the EU.
- Pharmaceutical companies have been told to stockpile an extra six weeks' worth of medicines to ensure a "seamless" supply. The U.K. will continue to accept new medicines that have been tested in the EU.
- Low-value parcels from the EU would no longer be eligible for VAT relief.
- New picture warnings on cigarette packets would be required, as the EU owns the copyright to the current ones.
U.K. businesses are very concerned that a 'no deal' outcome would have detrimental effects on various sectors. Last week, the Confederation of British Industry (CBI) Deputy Director-General, Josh Hardie, said, “By now, few can be in any doubt that ‘no deal’ would wreak havoc on economies across Europe. These papers [technical notes on Brexit] show that those who claim crashing out of the EU on World Trade Organization rules is acceptable live in a world of fantasy, where facts are not allowed to challenge ideology.”
All in all, politicians and economic analysts appear to be more vocal of the possibility of a 'no deal' scenario as it seems highly unlikely that a deal between the parties will be reached by the end of next March.