Businesses Aren't Ready for No-Deal Brexit, U.K. Watchdog Says

(Bloomberg) -- The U.K. will introduce mandatory checks on trucks to ensure they’re ready to cross the border in the event of a no-deal Brexit as a majority of businesses remain unprepared, the public spending watchdog said.

The border will be “less than optimal” under a no-deal exit, meaning delays for businesses and the public, the National Audit Office said Wednesday in a report on Brexit preparedness. In a worst case, the flow of goods through the channel crossings could be cut by 45%-65%, and take up to 12 months to return to normal, the NAO said, citing government estimates.

U.K. Prime Minister Boris Johnson has pledged to lead the country out of the European Union on Oct. 31, with or without an agreement to soften the impact. On Wednesday, British and EU officials were pessimistic about the chances of securing a deal as Johnson’s Northern Irish allies resisted plans drawn up in talks in Brussels.

Under a no-deal Brexit, the government will divert trucks lacking the appropriate documentation to clear French customs at the approaches to the ferry port at Dover and the channel tunnel to limit tailbacks, the report said. It would also build temporary arrangements to manage crossings between Northern Ireland and the Republic of Ireland, but says that these are not likely to be sustainable.

The watchdog said that only 5% to 20% of small- to medium-sized enterprises are prepared for French customs. As of early this month, only 10% of traders that will need to make a customs declaration on the first day of a no-deal Brexit have registered for the simplified procedures offered by the U.K. government.

If a deal isn’t approved by the British Parliament by Saturday, then Britain will once again be pitched into a constitutional crisis that could result in a chaotic no-deal exit. Johnson will be told by Parliament to seek an extension to EU membership, but he has sworn not to delay Brexit further and a legal battle will probably follow.

To contact the reporter on this story: Siddharth Philip in London at sphilip3@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Frank Connelly, Jennifer Ryan

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