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Monday 21 January 2019

The deal with “no deal”

What happens if Britain leaves the EU without a deal – a glut of Welsh lamb? Stalled UK car production? The EU flooded with poisonous shrimp? Xavier Greenwood offers an hour-by-hour vision of the near future

By Xavier Greenwood

Thursday 28 March
No movement in Parliament. It is now clear to almost everyone that “no deal” is going to happen. Sterling has fallen sharply.

The Bank of England warns that it could fall by as much as 25 per cent in the event of “no deal”. It fell by 10 per cent right after the referendum, and 17 per cent over the six months following the vote to leave the EU.

Friday 29 March
23.00, UK time
(midnight across the Channel)

At home, UK
As of 23.01 settlement rights for EU citizens in the UK have been reduced. Their registration deadline has been brought forward by six months to the end of 2020. There is now a deadline for bringing close family members into the UK: 29 March 2022.

At home, EU
EU citizens who planned to make a long-term move to the UK can no longer do so without the right paperwork. The chance to apply for settled status is now guaranteed only to those already living in the UK.

About 1.3 million British citizens living in the rest of the EU have become third-country nationals (although EU member states should have guaranteed their rights to remain and access healthcare).

The EU Commission is leaving it up to individual member states to give assurances over rights to UK citizens living in the EU. The Healthcare (International Arrangements) Bill allowing the UK to negotiate reciprocal healthcare arrangements with the EU is currently going through Parliament.


The Irish border
The border is now a customs and regulatory border.

There are 208 border crossings between Northern Ireland and the Republic. Many are inconspicuous and hard to reach. The farm of Thomas “Slab” Murphy, believed to be the former chief of staff of the Provisional IRA, straddles the border.

Ireland has put up no new infrastructure, fearing a reaction from dissidents.

Discreet technological solutions are not available yet.

The European Commission is uneasy about this stopgap measure. It wants to protect the Good Friday Agreement, but it also wants to maintain the integrity of the single market.

Saturday 30 March

Departures, UK airports
The first flights of the day are taking off, but only with “basic connectivity” under an EU pledge to avoid “full interruption of air traffic”. This is one of 14 measures within a Contingency Action Plan produced by the European Commission for “damage limitation” in key sectors of the EU and UK economies in the event of “no deal”. It lasts 12 months.

Though the Contingency Action Plan allows UK-EU flights to continue after “no deal”, it does not allow UK airlines to fly between EU countries.

Some flights could be cancelled at short notice. UK airlines cannot add new routes or increase the frequency of flights on EU routes on 2018 levels, but some have already promised new routes and flights, expecting a last-minute deal which has not been struck.

On other flights some passengers are struggling to board. Schengen rules for British passport holders have changed.

Without a deal, Britons can only enter the Schengen Area if their passport has been issued in the past ten years, with at least three months validity from the date of arrival.

Not everyone will remember to renew in time.


Dover, England

Britain is not conducting any new checks at Dover.

Transport secretary Chris Grayling has said as much and the government has created no new infrastructure at Dover. The problem? If we don’t find an alternative to the EU’s VAT central clearing process in the event of “no deal”, we would need a way to differentiate between EU and non-EU goods.

It lacks the inspection facilities because there was no time or room to build them, and any delays mean tailbacks.

The Port of Dover says that an extra two minutes of paperwork clearance per lorry would cause a 17-mile tailback. As many as 10,000 lorries cross the Channel every day.

Extra ferries are in use in other ports, but there are not enough of them to match the level of disruption. They only provide 10 per cent extra capacity, which includes vessels chartered by Seaborne Freight, which aren’t ready until the end of April.

Calais, France
Disruption in the UK is not being caused by delays at Dover, but at Calais.

In June 2015, strikes in Calais led to thousands of lorry drivers being stuck on the M20 for days. As the Cabinet Office put it in December 2018, the impact of French delays on the UK, and vice versa, is down to the “frequent and closed loop nature” of the Dover and Folkestone crossing.

France has set up third-country controls. The issue is not so much customs declarations (Britain’s continued membership of the Common Transit Convention allows importers to pay duties at destination) as the new regulatory barrier of veterinary inspection posts – used to check animals and products of animal origin exported from third countries, such as the UK. France has hired 700 extra customs officers to deal with this and has been preparing for more than a year, but its capacity is still too low to eliminate delays.

Some of the pressure is off thanks to a minority of UK exporters who are not exporting for the time being. Some livestock exporters have not obtained the required health certificates.

Two-thirds of vets currently qualified to sign the certificates don’t plan to renew their qualification. Up to 95 per cent of vets working in abattoirs are from the EU.

Some have not been able to complete their customs declarations forms and some have been deterred by new tariffs which EU buyers would have to pay. There are still too many lorries for Calais to cope with. Lorries that haven’t made the journey at all can only delay so far.

Her Majesty’s Revenue and Customs estimates that between 145,000 and 250,000 traders would have to make custom declarations for the first time in the event of “no deal”.

M20: Operation Brock
A four-lane, 13-mile stretch of the M20 between Junction 8 near Maidstone and Junction 9 near Ashford is filling up with lorries.

Port of Belfast, Northern Ireland
Hearing that the UK is waving through incoming goods at Dover, the Port of Belfast is stepping up checks on agricultural products coming in from the UK at the behest of the EU.

Some of the 1,000 standby police on hand from England and Scotland will try to keep things moving.


British territorial waters
British trawlers can no longer automatically land fish in any EU port. They need to notify the port that they want to enter and issued a catch certificate for every consignment of fish to be landed.


Old Queen Street, London
Scotland Yard’s “no-deal safety net unit” opens for business. This is a police unit housed in new offices leased for £250,000 with views over St James’s Park, but no access to the Schengen Information System II, a database on EU immigration and border control shared by its law-enforcement agencies.

British police checked the system 539 million times in 2017.


EU airports
Early passengers from the UK have landed and turned off airplane mode. Phones ping with messages from O2, EE, Three or Vodafone. All four networks have promised to preserve free data roaming.

These networks provide full coverage to 85 per cent of the UK.


Parliament, Westminster
An emergency sitting of the House of Commons is likely if new regulations are needed that cannot wait until Monday or if there is pressure for the prime minister to give a statement to parliament.

Such a sitting can be forced on the government by a temporary amendment to the House’s standing orders passed by a simple majority.

Before today the House has sat on a Saturday only 21 times since 1900, and only four times since 1939 – for the outbreak of the Second World War, a summer adjournment debate in 1949, the Suez Crisis and the invasion of the Falkland Islands.

Her Majesty’s Revenue and Customs, Westminster
HMRC is not collecting import tariffs on EU food. Britain’s new Customs Declaration Service is not ready and the current system lacks the capacity to handle a rapid five-fold increase declarations.

With delays at Dover, the Government fears unacceptable price spikes if it also collects tariffs. The UK is still collecting tariffs on imports from everywhere else, however, in violation of the World Trade Organisation’s (WTO) most-favoured-nation rule.

One element of the most-favoured-nation rule is that (without a trade agreement) you cannot normally discriminate between trading partners, for instance by collecting tariffs from some partners but not others.

The WTO’s Goods Council meets next on 11 April. Its rules require members with complaints to add them to its agenda by today.


European airports
In principle British travellers hiring cars in the EU now need an International Driving Permit (IDP) to do so. Whether rental companies enforce this in practice remains to be seen.


Bagsværd, Denmark
Insulin manufacturer Novo Nordisk, which supplies more than half of Britain’s insulin, is flying supplies into the UK on space it has reserved with airlines with this scenario in mind.

On medicines generally, European and British firms have stockpiled enough to last a few weeks but European suppliers still have to get the drugs to the UK, and the Calais-Dover route cannot be relied on.

If disruption lasts for more than a few weeks, stockpiles could run out.

The Government’s worst-case scenario forecasts six months of disruption at Dover and Folkestone.


UK supermarkets
Some fresh produce – much of which comes from overseas – is running short. A full day of disruption at Dover has started to hit suppliers. Fresh food can’t be stockpiled.

Britain imported £11.1 billion worth of fruit and veg in 2017, while just under half the food consumed in the UK is domestically produced.


A warehouse in Northern Ireland
Customs declarations for exports to the Republic are being checked randomly.

An HMRC official attempts to enter a warehouse with a police officer.

This is to see if producers are complying, but the warehouse door is locked.


Liverpool, England
The UK has developed a replacement system for the Trade Control and Expert System (TRACES), which controls the import and export of live animals, animal products and “high-risk food and feed” across EU borders. However, there has not been time to complete the necessary training for officials at the Port of Liverpool.

As of September 2018, the Government’s Border Delivery Group gave the TRACES replacement system an amber-red risk rating, warning that:“There is a large challenge in engaging stakeholders and ensuring businesses/customers are ready.” An amber-red rating means that: “Successful delivery of the project/programme is in doubt with major risks or issues apparent in a number of key areas.”

This creates a vulnerability for EU members if foodstuffs banned in the EU gain access to the UK after a no-deal Brexit. For example, some shrimps originating in India have been treated with antibiotics that are banned in the EU because they can cause blindness.

If officials misunderstand notifications from the new system, banned shrimps could be waved through.

Sunday 31 March

Belfast, Northern Ireland
The Stena Lagan from Liverpool arrives in Belfast. If it is carrying Indian shrimps already approved in Liverpool, they face no further checks before the Irish border.

Jonesborough, on the Irish border
Indian shrimps being delivered via Northern Ireland could now be in the single market.

Manston Airport: Operation Brock
Assuming even minimal delays at Dover the M20 lorry park is now at capacity and the designated overflow at Kent’s disused Manston Airport is filling up.

Monday 1 April

Mini plant, Oxford
Mini is not making cars today. BMW has brought forward its summer maintenance shutdown.

Sky News reported in September that the Mini plant in Oxford is planning to shut down for at least a month from 1 April in the event of “no deal”.

The Honda Civic plant in Swindon has taken the same step. It keeps enough parts on site to function for 36 hours. It would need a storage facility the size of 42 football pitches to keep going for nine days.

Honda plans to shut down its Swindon plant for six days in April to minimise disruption.


Ceiriog Valley, Wales
Before Brexit, 92 per cent of Welsh lamb was exported to the EU. New export tariffs of at least 50 per cent mean it is now uncompetitive in the EU market. The domestic market is now oversupplied. Prices are likely to fall.

Wednesday 3 April

UK supermarkets
Continued disruption on the Dover-Calais crossing means UK retailers are considering flying in produce from the US. Prices for these product lines are likely to rise.

Saturday 6 April

Aintree, Liverpool
The Grand National field may be sparser than usual.

A no-deal Brexit ends the tripartite agreement that allows free movement of horses between Britain, Ireland and France. Thoroughbred horses are allowed into Britain but cannot leave.

As of 18 January the five favourites to win the National are all Irish or French.

Monday 8 April

UK supermarkets
Gaps may be appearing in the refrigerated section. In-store and other normal supplies are running low, and some suppliers are turning to their stockpiles.

Others have not been able to stockpile because of price or lack of space.

90 per cent of the 385 refrigerated warehouses in the UK are in constant use. The Food Storage and Distribution Federation said at the end of 2018 that their members were already at capacity until beyond April.

Sainsbury’s has 20 distribution centres in the UK and each has room for a week’s food. But as CEO Mike Coupe has said: “It is not as if there are another 20 distribution centres out there.”

Wednesday 10 April
Poultry farm, the Peak District

Disruption at borders and ports means British exporters cannot ship all their dark chicken meat to the EU. Most chickens reared for their meat have to be slaughtered after about 38 days. Where they cannot be kept alive or slaughtered and refrigerated, they have to be incinerated.

Thursday 11 April
WTO, Geneva
The WTO’s Goods Council meets in Switzerland, where Britain can be expected to explain that violating the Most Favoured Nation rule was an emergency measure.

Other WTO members accept the argument but insist on a clear timeline showing when Britain will start charging tariffs on EU imports and imposing full customs checks at Dover.

Britain’s waiving of checks is not a sustainable solution. The UK cannot refuse to have a border forever.

The National Audit Office believes it could take up to three years to put the necessary infrastructure in place in ports, airports and other border crossings.

Great Russell Street, London
An exhibition featuring Edvard Munch’s The Scream opens in the British Museum.

All images by Getty Images