EU activates preparations for no-deal Brexit

The European Commission has triggered an action plan to protect EU citizens and businesses from “major disruption” if the UK crashes out without a deal on March 29.

With just 100 days to go the scheduled date of Brexit, and the UK Parliament far from ratifying Theresa May’s Withdrawal Agreement, the commission said it was “essential and urgent” to act.

Plans cover 14 areas most likely to be affected, ranging from financial services to aviation, customs and carbon emissions trading, and are designed to “protect the vital interests of the EU”.

The move came a day after the Cabinet agreed to implement in full the UK’s own preparations for a possible no-deal Brexit.

In a statement issued in Brussels, the commission stressed that the ratification of the November Withdrawal Agreement continues to be its “objective and priority”.

It said: “Irrespective of the scenario envisaged, the United Kingdom’s choice to leave the European Union will cause significant disruption.”

Measures being put in place would “limit the most significant damage” caused by a potential no-deal scenario but could not mitigate in full the impact of the UK leaving without an agreement, it said.

It warned they would not “in any way compensate for the lack of stakeholder preparedness or replicate the full benefits of EU membership or the terms of any transition period, as provided for in the Withdrawal Agreement”.

Measures being undertaken now are “limited to specific areas where it is absolutely necessary to protect the vital interests of the EU” and will be “temporary in nature, limited in scope and adopted unilaterally by the EU”.

The commission urged EU27 states to take a “generous” approach to the rights of UK citizens in the EU following a no-deal Brexit, “provided that this approach is reciprocated by the UK”.

EU27 states should ensure UK citizens legally residing in the EU on the date of withdrawal will continue to be considered legal residents and should take a “pragmatic” approach to granting temporary residence status, it said.

UK nationals should be exempted from visa requirements, provided that all EU citizens are equally exempt from UK visas.

Remaining EU states should take “all possible steps” to protect social security rights of UK migrants who have settled in their countries as well as their nationals living in Britain.

The commission announced “a limited number of contingency measures” to safeguard financial stability in the EU27 following a no-deal Brexit.

These include:

– A 12-month equivalence decision ensuring there will be no immediate disruption in the central clearing of derivatives

– A 24-month equivalence decision to avoid disruption in central depositaries services for EU operators currently using UK operators

– Two 12-month regulations allowing the renewal of certain over-the-counter derivatives contracts

Temporary measures were adopted to avoid “full interruption” of air traffic between the EU and UK.

But the commission warned they will only ensure “basic connectivity” and “in no means replicate the significant advantages of membership of the Single European Sky”.

The statement said it was “essential” for EU27 states to make preparations to apply customs controls in relation to the UK in the case of a no-deal Brexit.

It said that from January 1, the UK’s involvement in elements of the carbon emissions trading system will be temporarily suspended, to ensure that an eventual no-deal Brexit does not disrupt its smooth functioning.

The commission proposed a regulation to allow the continuation of the EU’s Peace programme in Northern Ireland until the end of 2020 in the event of no deal.