Saying that it had opted to make contingency plans in the financial services, air transport, and customs sectors, the European Commission announced on December 19 that it has drawn up an emergency backup plan in the event that a no-deal cannot be finalised with the United Kingdom over the latter’s withdrawal from the bloc in March of next year.
The plan that comes 100 days ahead of the divorce – known commonly as Brexit – with the United Kingdom and consists of 14 measures concerning “a limited number of sectors for which the lack of agreement would be a major disruption for citizens and businesses in the EU-27,” according to the Commission. The EU executive hopes the plan will limit the collateral damage to be caused by a no-deal Brexit scenario.
The UK is set to ratify the current Withdrawal Agreement that was negotiated late last month in mid-January. If the pact fails to pass, the Commission said the emergency measures in place will be, in principle, temporary and limited in scope and unilaterally adopted by the remaining 27 remaining members of the bloc.
While presenting the contingency package, the European Commission’s Vice-President for the Euro Valdis Dombrovskis, admitted that the risk that the British House of Commons may not ratify the Withdrawal Agreement – a prospect that would lead to a so-called “hard Brexit” which would not include a transition period to give both parties time to negotiate their future relationship -remains exceptionally hight
Dombrovskis also said that the emergency plans that have now been put into place allow for reciprocal measures to be implemented by the UK and observed by Brussels.
The option of a ‘hard Brexit’, without access to the European single market or to the Customs Union, would cause Britain’s GDP to fall by 9.3% over 15 years, according to a report released at the end of November by UK Prime Minister Theresa May‘s Conservative government.
The latest analysis of the Bank of England warns that a Brexit without an agreement will cause a depreciation of the pound of up to 25% and will trigger inflation that will hit 6.5%. The UK’s GDP will fall by around 8% over the current level by 2023, while unemployment will rise to 7.5%, and the price of housing will fall by around 30%.