EU prepares for no-deal Brexit

Brussels seems to appear more accommodative of the UK while stepping up preparations for an exit. 

Background 

On June 23rd, 2016, Britain narrowly voted to leave the European Union, stunning Europe and the world in general. The EU employs a set of policies for its 28-member states that aim to ensure the free movement of people, goods and trade among other services. Britain is deeply intertwined with the workings of the EU especially with regard to trade.

PM Theresa May’s leadership in the negotiations has been heavily criticised. She has been unable to form a consensus within the Parliament, or even her own party, for the course of Brexit. Her “directionless” leadership has not convinced most of her peers in Westminster and she was challenged by a no-confidence motion in early December 2018, which she narrowly won.

Despite her best efforts, the British parliament is not accepting the proposed Brexit agreement. Irrespective of whether they arrive on a deal or not, the UK is officially set to leave in March 2019.

Analysis 

Diplomats in Brussels say there is one telling measure of the low reached in the Brexit saga: the political blame game has started over responsibility for a chaotic no-deal exit. From the moment Britain triggered the two-year Article 50 clock on its departure in March 2017, the “cliff-edge” threat has been used by Brussels negotiators, both to exert pressure and kick-start national planning for the worst.

However, such a scenario, once dismissed as a theoretical doomsday outcome, has taken a sense of urgency since Westminster overwhelmingly rejected Theresa May’s draft deal, prompting her to seek a renegotiation just weeks before Britain’s March 29 departure date.

“My analysis is that we are really heading for the abyss,” said one senior EU figure handling Brexit. “We may extend to June. But it is coming. The risk of no-deal is huge.”

The drumbeat of planning helps those, like German chancellor Angela Merkel, who see the Brexit brinkmanship as potentially helping shift support in favour of a deal in Westminster.

“A three months extension is likely,” said Rem Korteweg, a research fellow at Clingendael, the Netherlands Institute of International Relations. “But it is not to give the UK a shot at another agreement. It is to give the EU more time to prepare itself for no-deal. They will not say this out loud, but this is the calculus.”

Brussels has long written off the possibility of convincing the British public. The focus of the EU27 is instead on winning the battle at home. The first challenge is ensuring Mrs. May takes “ownership” of a deal, and that the public see it as being crafted around her red lines. For Brussels, with ownership also comes the responsibility for setting it right and securing ratification.

A senior EU diplomat said the “gruelling” call last week between Mrs. May and Donald Tusk, the European Council president, hit a particular low when the prime minister suggested the EU come forward with new ideas to salvage the Brexit deal. Mr. Tusk made clear it was time for Britain to step up with written solutions, backed by a sustainable House of Commons majority.

Ms. Merkel is concerned about being blamed for Brexit going wrong in the run-up to May’s European Parliament elections, which coincides with a clutch of German regional polls. Other European capitals expect the chancellor to appear as accommodating as possible, without changing the withdrawal agreement save for a few cosmetic frills. “She wants to be seen doing everything she can to avoid it,” said one senior EU diplomat. “If it then happens, then that is fine.”

Two of the most difficult challenges of a no-deal Brexit — the Northern Ireland border and the hole left in the EU budget from missing UK contributions — are still largely sidestepped in public EU preparations.

Senior EU negotiators privately express confidence that the Brexit upheaval will force the UK to ask for leniency within weeks.

Assessment 

Our assessment is that the EU is not willing to renegotiate the proposed exit deal as EU countries stand to gain from it more than the UK. We believe that PM May is now fighting not only for a fair Brexit deal but also for her own political survival. We also feel that the rising disagreements within the Conservative Party may lead to a new Brexit Referendum, an idea which is supported by most members of the House of Commons.