JANE MERRICK on no deal: from rank outsider to front-runner

The Brussels adage that ‘nothing is agreed until everything is agreed’ is now more than just a cliché about negotiations coming together at the last moment. It has become an excuse for the lack of urgency in Brexit talks.

Why else would the major sticking point of Northern Ireland and the difference between the type of backstop envisaged by the UK and Brussels be only looming into focus this week?

Theresa May’s strategy, of course, has been to take things to the wire to make it look like she’s scored a victory at the last moment. Presenting an ultimatum to her party, wider parliament and Brussels of her version of a good deal – Chequers – against a no-deal may have seemed like a clever negotiating policy, yet it has only made a no-deal more likely.

Only a minority of MPs ever believed Chequers makes sense, and too many Brexiteers are relaxed about a no-deal, not least – so say the briefings – the DUP leader Arlene Foster, who, it is said, is now ‘ready’ to trigger such an outcome and regards it the ‘likeliest’ option.

Whatever the twists and turns ahead, any deal agreed between the government and Brussels must still be ratified by the UK parliament – including the increasingly rebellious pro-Brexit Conservative MPs and the DUP – and all the European national legislatures. As such, no-deal remains a serious, and frightening prospect.

This prospect has increased dramatically since last Sunday’s talks between Brexit secretary Dominic Raab and EU negotiator Michel Barnier failed to break the deadlock. And, again, when the prime minister went to the Commons on Monday to head off a potential leadership challenge and the possibility of cabinet resignations, she made clear she was not changing tack from her do-or-die ultimatum. Her two-and-a-half hour cabinet meeting on Tuesday underlined the PM is refusing to change course.

As a result, no-deal is no longer merely a worst-case scenario in the computer models of Whitehall and multinational businesses. In fact, those contingency plans are not just on standby for March 29, 2019, but are already being implemented. This weekend marks 160 days until Brexit Day, but, in reality, the UK is already on a no-deal footing.

In the view of Donald Tusk, the president of the European Council, a no deal outcome is ‘more likely than ever before’. It is certainly true that it suits both sides to ramp up the rhetoric to focus the minds of negotiators, yet it would be a massive gamble for businesses and government agencies to not take it seriously. The betting firm Smarkets this week puts the chances of a no deal at 50%, and although this level is not as high as it has been, it will cause alarm in Westminster and Brussels.

Senior civil servants have told ministers to start implementing contingency plans for a no-deal by the end of this month, regardless of any tentative deal struck before then. As such, plans for stockpiling medicines must start now, meaning there should be a six-week back-up of vital treatments in place months ahead of Brexit Day, in case the UK crashes out of the EU. Last week saw the start of building work for a lorry park on the M26 in the event of disruption at Dover. Businesses, whose very survival depends on the outcome of Brexit and who cannot simply be bystanders in the political game of chicken between the UK and EU, have already started to make changes in preparation for a no-deal.

And these are not empty threats: AstraZeneca, the pharmaceuticals giant which employs 7,000 people in the UK, has already activated its contingency plans, including freezing manufacturing investment in the country until there is more clarity on what a deal will look like. The firm’s chairman, Leif Johansson, told Le Monde the firm is stockpiling medicines at national borders and spending £40m on setting up new laboratories outside the UK. He said: ‘If a transition deal does not make clear what will happen in the future, we will maintain our decision not to invest.’

Similarly, car manufacturer Ford, which employs 14,000 workers in the UK, has warned that a no-deal could force the company to change its operations in the country. Steven Armstrong, the head of European operations for Ford, said a hard Brexit is a ‘red line’ that could ‘severely damage the UK’s competitiveness and result in a significant threat to much of the auto industry, including our own manufacturing operations’.

Officially, the Department for Exiting the EU maintains that a no-deal is ‘unlikely’ because of the ‘mutual interests of the UK and the EU in securing a negotiated outcome’. Last week, the government published the latest in its series of ‘technical notices’ – now numbering more than 100 – of how agencies, businesses and individuals should prepare for a no-deal, including warnings to travellers to take out insurance now for Eurostar trips booked next year, in case services are subjected to massive disruption, and the possibility of an end to free roaming for mobiles for Britons travelling in Europe.

DExEU’s language is cautious, insisting that ‘it has always been the case that as we get nearer to March 2019, preparations for a no-deal scenario would have to be accelerated. Such an acceleration does not reflect an increased likelihood of a ‘no-deal’ outcome. Rather it is about ensuring our plans are in place in the unlikely scenario that they need to be relied upon’.

But privately no one in Whitehall is pretending a no-deal isn’t a highly likely possibility. There is now a balancing act to be performed – between serious preparation and avoiding what Tusk warned in his letter could be momentum towards a no deal. But some UK officials are concerned that May’s long-held strategy of ‘no-deal is better than a bad deal’, having started out nearly two years ago as a line to win over Brexiteers who had been concerned that a prime minister who had voted Remain might go soft on Brexit, has become an unbreakable shibboleth. Some see it as a ‘disaster’ that no-deal has been cast as an acceptable outcome.

Labour MP Chuka Umunna said: ‘There is no doubt about it – crashing out with no deal would be catastrophic. If people don’t believe this, simply read the technical notes the government has issued firms telling them what they need to do to prepare for this scenario. Dominic Raab would have called this Project Fear once upon a time, now the Brexit secretary is the one issuing the warning notices as this disaster becomes Project Reality.’

The concern is that, despite veiled threats by Cabinet ministers at pizza summits this week, May is in a stronger position than the chaos around her 
would imply. Brexiteers admit there aren’t the numbers of eurosceptic Conservative MPs to topple her in a confidence vote, even if the target of 48 Tories is reached to trigger that vote. The diversity of opinion across the House of Commons points, at the moment, to a no-deal by default – as the official Labour line is to vote against any deal the government reaches that falls short of its ‘six tests’. With the threat of no-deal looming larger than ever, we might need to replace that old Brussels adage with the question: what if nothing is ever agreed?