EU Discusses Unilateral ‘No Deal’ Brexit Contingencies

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The European Union has started exploring what emergency measures it may need to take without the U.K.’s cooperation in the case of a “no deal” Brexit, according to people familiar with a meeting between the bloc’s 27 remaining governments.

During closed-doors talks in Brussels on Wednesday, ambassadors began to discuss the unilateral steps the EU may take should negotiations collapse before the U.K. leaves on March 29. While that is likely to include continuation of vital services, such as trade in medicine and flights, the individual industries haven’t been confirmed.

The discussions are particularly sensitive because the EU doesn’t want to be seen to be giving the U.K. any reason to think there is any alternative to the Brexit deal on offer, the people said. EU officials believe a failure to reach an agreement will send the level of trust between the U.K. and other governments plummeting, reducing the likelihood of any cooperation and forcing the EU to take matters into its own hands.

The Brexit negotiations are reaching their most crucial phase with seven weeks to go before a mid-November deadline, and talks in stalemate. Officials in Brussels don’t expect negotiations for an orderly withdrawal to advance before U.K. Prime Minister Theresa May clears the hurdle of the Tory party conference, which runs until Oct. 3. They are hoping for progress in time for a summit on Oct. 18.

The European Commission told ambassadors during Wednesday’s talks that it had scrutinized the entire EU acquis -- the full body of treaties, legislation and court rulings that make up the bloc’s rulebook -- so they could take steps to mitigate the impact of Brexit, whether there is a deal or not. The EU is worried about "uncoordinated" action by governments, one of the people said.

No-Deal Planning

Ambassadors agreed that it would be for the EU’s leaders, either at their summit in mid-November or later, to decide when the point had been reached when no-deal planning would take over.

There’s no consensus yet about the latest possible date for such a decision, one of the people said. The bloc is concerned that setting the deadline earlier than is necessary would have a negative impact on the ongoing negotiations. But some governments pointed out during the meeting that the EU can’t afford to be too late because some of the contingency measures require time.

The European Commission, the EU executive in Brussels, on Thursday reiterated that it is prepared for any Brexit outcome and cautioned against engaging with some of the potential scenarios being floated.

‘Horror Stories’

“You give me the opportunity to sort of suggest that we all collectively take a certain distance from the many horror stories that are being circulated,” commission spokesman Margaritis Schinas told reporters in Brussels. “We need some serenity, calmness, coolness to proceed with our work.”

According to a document prepared for the meeting seen by Bloomberg, countries need to make contingency plans because “uncertainty remains about the outcome of the negotiations and the ratification of a possible deal.”

Even if the U.K. and the EU strike a deal, the need for approval by lawmakers in the British and European parliaments before the U.K. leaves adds to the unpredictability.

European governments believe “preparedness work has to intensify in the months ahead at national as well as EU level,” the EU said in its document.

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