How EU Nations Are Ramping Up Preparation for a No-Deal Brexit
With U.K. Prime Minister Theresa May set to lose Tuesday’s key Parliament vote on her Brexit deal, European Union nations are bracing for the chaos that is expected if Britain crashes out of the bloc without a deal in just 73 days time.
In the weeks ahead, May will be scrambling for a way to get her agreement approved, but many Brexit-watchers will be focusing on the prospect of a disorderly divorce. The European Commission has published its no-deal contingency plans, with 14 “essential and urgent” policies for EU member states to adopt. The measures focus on areas from air traffic to derivatives clearing to data sharing.
But the member states aren’t equal when it comes to no-deal planning. Below are the highlights of what individual governments are doing.
Germany has budgeted for an extra 900 customs officials to help handle goods traffic after Brexit. The government’s no-deal preparations also include provisions so that insurance products and some derivatives traded in euros can still be covered under the current passporting regime. The negative economic impact of a hard Brexit cannot be fully offset, German Economy Minister Peter Altmaier told Handelsblatt newspaper in a Jan. 11 interview. “We are already seeing that the weakness of the British pound is hitting Germany’s export industry hard,’’ he said.
The French Parliament in December passed a law to keep passenger traffic, road transport and trade operating between France and the U.K. in case of a no-deal scenario. The package of measures also allows the government to use executive orders to smooth out travel, residence permits, work issues and access to welfare for British citizens in France. French European Affairs Minister Nathalie Loiseau said the measures would allow a “stable situation for people” and “fluid communications” between France, the EU and the U.K.
The Spanish government plans to enact a decree by February on contingency plans in the event of a hard Brexit, Foreign Minister Josep Borrell said on Monday. The government also is setting up a page with Brexit advice for citizens and companies on the prime minister’s website. The three main areas of concern for Spain are aviation, financial services and agriculture/fishing. The government has been encouraging companies to improve their Brexit planning, including measures to avert damage from a cliff-edge scenario, Economy Minister Nadia Calvino said last week.
The Netherlands, home to Europe’s biggest port at Rotterdam, will hire 928 extra customs officials by the end of 2019, increasing its 5,000-strong customs force by 18 percent. At least 300 of the new hires will be in place by March 29. The focus of the boost in staff will be on the ferry traffic to Britain, which transports fresh flowers and produce daily. The Dutch Food and Consumer Product Safety Authority will hire 143 additional staff, the bulk of which will be veterinarians for examining animal shipments for import and export. Two-thirds of the extra staff will be on board by Brexit day.
Sweden is focusing on about 10 areas where “consequences could be immediate and serious” if there is a no-deal Brexit, including border issues, financial services, citizens’ rights and pharmaceuticals supplies, Swedish EU Minister Ann Linde said last week. The government in Stockholm is preparing measures “needed to soften the negative consequences in these areas,” she said. The government has passed measures on settlement of financial transactions and proposals on derivatives contracts are due to become effective in March.
The Belgian government has warned companies and citizens that a no-deal Brexit could lead to additional tariffs of 2.2 billion euros ($2.5 billion) for Belgian businesses and a loss of more than 40,000 jobs. The government in September made available an online tool called the “Brexit Impact Scan” to help businesses assess their preparedness for the U.K.’s exit. More than 5,000 companies have taken advantage of the tool, three-quarters of them in the country’s northern region of Flanders; about 85 percent of Belgian firms exporting to Britain are Flemish. With Europe’s second-biggest port at Antwerp, Belgium is increasing its 3,400-strong customs force with a first wave of 141 new staff, who will be operational as of April 2019. It also is investing in drones and underwater scanners for surveillance of its coastline and the North Sea, according to the Finance Ministry.
The Austrian government has prepared an omnibus law for all the legal changes a hard Brexit would require, from civil rights to transport to customs. Austria also has developed two versions of a website to explain the impact of Brexit to the general public -– one for a deal and one for no-deal. The website isn’t live yet, as the government is waiting for clarity on the Brexit process before launching the site in order to avoid confusing the public and undermining the efforts to ratify the Withdrawal Agreement. The Austrian Chamber of Commerce, meanwhile, has already set up a website telling businesses what to do to cope with Brexit risks. It includes help in dealing with more-complicated customs procedures and trademark issues. The government also is considering letting Austrians living in the U.K. keep their Austrian passport even if they take U.K. citizenship after Brexit, an exemption to the standard rule.
A hard Brexit could cost Denmark as much as 1 percent in lost gross domestic product, the government in Copenhagen said last month. A hard Brexit would mean 4,300 kroner ($660) in lost GDP per capita, according to a report by the Economy Ministry. The Danish government has hired more customs officers and asked banks to prepare contingency plans for a no-deal Brexit. The Danes are particularly worried about food and energy exports, fisheries and the future of derivatives clearing out of London.
Finland expects delays in processing shipments as volumes of imported goods that need to be declared are estimated to increase by a quarter in the case of a no-deal divorce. As many as 60 new staff will be needed for processing the declarations and shipments, according to Finnish Customs. The Finnish Medicines Agency is mapping out pharmaceuticals that might face supply constraints from a hard Brexit and expects to have a full list of such drugs by early February. The Interior Ministry is still considering how to handle the 5,000 Britons currently in Finland in case of a no-deal. The Tax Authority has set up a Brexit website and made changes to its computer systems, in particular related to the value-added tax paid by companies importing and exporting goods.
Portugal won’t require British citizens to have a visa even if there is a no-deal Brexit. It wants reciprocal treatment on this and other measures from the U.K. government. Tourism represents about 14 percent of Portugal’s gross domestic product, and the British rank as its biggest group of visitors. In addition, the government estimates that there are more than 22,000 Britons who are permanent residents in Portugal, and 22 percent of all passengers who arrive at Portuguese airports are British. The government will make 50 million euros available for loans to help companies adapt to a no-deal divorce. Sines and Lisbon, two of Portugal’s main ports, are already well-equipped to handle non-EU trade, so a Britain outside the bloc won’t be a problem. A study sponsored by the Business Confederation of Portugal showed that exports to the U.K. could drop as much as one-quarter in the medium to long term with Brexit, and that Portugal’s economic growth could be hit to the tune of 0.5 percent to 1 percent.
The Latvian customs agency plans to hire 48 additional people in the event of a no-deal Brexit. The Foreign Ministry in Riga estimates that customs-processing costs will increase by about 10 million euros over the next three years, with the biggest component of that being additional customs and veterinary checks. The Foreign Ministry has created the email address firstname.lastname@example.org for Brexit-related inquiries; and every government ministry is to have a special webpage on Brexit.
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