A Pro-Brexit campaigner waves a flag with the “Leave means Leave” slogan on outside the Houses of Parliament in London. (Photographer: Luke MacGregor/Bloomberg)

No One Is Ready for a No-Deal Brexit

(Bloomberg Opinion) -- With Brexit negotiations paralyzed, and fewer than 100 days till the clock runs out, it’s worth remembering that the U.K. government — despite its assurances — remains entirely unready for a no-deal exit from the European Union. Pretending otherwise helps no one.

In recent weeks, the government has started making some frantic preparations. It has directed 2 billion pounds to no-deal provisions, hired some 10,000 staffers, and redeployed hundreds of civil servants to help shorthanded departments. Rather alarmingly, it’s also putting about 3,500 troops on standby.

All this amounts to an expensive bluff. From the beginning, the government has tried to use the prospect of a chaotic exit as negotiating leverage — “No deal is better than a bad deal,” as Prime Minister Theresa May has said. It was never terribly convincing, not least because the U.K. was doing almost nothing to prepare for it. To pretend to get serious now, with a mere three months to go, is simply delusional. EU negotiators know full well that Britain could never accept the consequences of no deal — and these expensive preparations won’t induce them into new concessions.

It bears repeating that a no-deal exit would be a disaster. Overnight, customs and regulatory barriers would rise. Licenses and approvals issued in Britain would no longer apply across the border. Supply chains would freeze up. Food distribution could break down. Growth would crater, the pound could plummet, prices might soar and unemployment could double. That’s to say nothing of non-economic consequences: U.K. police could lose access to tools for tracking terrorists, British planes and pilots could be grounded, hospitals could run out of medicines, and garbage could pile up — not to mention dead bodies.

Dire as these looming calamities are, the government has offered hardly any real details about how it intends to mitigate them. Its plans to deal with drug and food shortages have mostly been hashed out in secret. What ideas it has aired publicly — chartering ships on a mass scale to deliver critical supplies, for instance — have been unnervingly unrealistic.

It has also done next to nothing to help businesses. It started publishing formal guidance on a no-deal exit only in August, thereby giving companies a mere seven months to prepare. Executives say they’re being left in the dark. Small businesses report being ignored entirely. Fully 94 percent of firms in one survey complained about a lack of information.

Even where more robust planning has started, the results are no more encouraging. Take border controls. In a no-deal scenario, the U.K. would need to process some 260 million customs declarations a year, compared to about 55 million currently. A recent audit found that 11 out of 12 critical IT systems intended to handle this added deluge won’t be ready in time, nor could the needed infrastructure or staff be in place. As a result, the government would likely forgo regulatory and safety checks on many goods coming from the EU, a situation it concedes is “less than optimal.”

A better approach to all of this would be honesty. The time for bluffing is up. No government could willingly accept a calamity on the scale of a no-deal Brexit, and May should simply say so. If Parliament rejects her Brexit deal in January — as in all likelihood it will — she should push immediately to delay the Article 50 process and stop the countdown. That would allow time for either new elections or, far better, a second referendum that would let the public finally break this deadlock.

To continue with Potemkin no-deal preparations will only compound the damage. Vast sums are being spent to sustain an illusion that isn’t fooling anyone. Meanwhile, no progress is being made on more realistic options — and the clock ticks and ticks.

Editorials are written by the Bloomberg Opinion editorial board.

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