UK Government’s preparations for a ‘no deal’ scenario
Purpose of this notice
As announced by the Prime Minister and Secretary of State for Exiting the European Union on 18 July 2018, the government will be publishing a series of technical notices during August and September. Today we are publishing the first 25 of these notices and will publish more during September.
These notices will set out information to allow businesses and citizens to understand what they would need to do in a ‘no deal’ scenario, so they can make informed plans and preparations.
A scenario in which the UK leaves the EU without agreement (a ‘no deal’ scenario) remains unlikely given the mutual interests of the UK and the EU in securing a negotiated outcome. Following the publication of the UK government’s white paper for the future relationship on 12 July 2018, we are working with the EU’s negotiating team at pace to agree the terms of our future relationship alongside the Withdrawal Agreement later this year. However, it is our duty as a responsible government to prepare for all eventualities, including ‘no deal’, until we can be certain of the outcome of those negotiations.
For two years, the government has been implementing a significant programme of work to ensure the UK will be ready from day 1 in all scenarios, including a potential ‘no deal’ outcome in March 2019.
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.
This is consistent with the statement published on 6 July 2018 following the Cabinet’s away day at Chequers:
“It remains our firm view that it is in the best interests of both sides to reach agreement on a good and sustainable future relationship. But we also concluded that it was responsible to continue preparations for a range of potential outcomes, including the possibility of ‘no deal’. Given the short period remaining before the necessary conclusion of negotiations this autumn, we agreed preparations should be stepped up.”
Context – progress in negotiations
The government has been clear from the outset of this process that the UK would prepare for all scenarios. The Prime Minister set out in her Lancaster House speech on 17 January 2017 that:
“It is right that the government should prepare for every eventuality – but to do so in the knowledge that a constructive and optimistic approach to the negotiations to come is in the best interests of Europe and the best interests of Britain.”
The government continues to believe that an orderly, negotiated exit is the best outcome for all parties.
The EU has also been clear that reaching a negotiated agreement with the UK continues to be its goal; the guidelines adopted by the European Council on 23 March 2018 set out “the Union’s determination to have as close as possible a partnership with the UK in the future.” and the Commission reiterated on 19 July 2018 that they are “devoting very significant resources and committing great efforts to achieve an agreement.”
Substantial progress has already been made, with agreement reached on the majority of the draft Withdrawal Agreement. A version of the text was published on 19 March 2018, which highlighted those areas in which agreement had been reached including citizens’ rights, the financial settlement and a time-limited implementation period.
The UK/EU joint statement on the Withdrawal Agreement of 19 June 2018 outlined subsequent progress in negotiations, with the majority of the text now agreed.
We are making good progress on the outstanding issues that need to be resolved before we have concluded the deal on the entirety of Withdrawal Agreement. We remain on track to reach agreement by the autumn and the EU acknowledged in their communication on 19 July 2018 that “it is currently planned that the Withdrawal Agreement would be agreed by the European Union and the United Kingdom in October 2018.”
More broadly, the UK published its white paper for the future relationship on 12 July 2018, setting out a detailed and comprehensive set of proposals. The UK has subsequently published a white paper on legislating for the Withdrawal Agreement on 24 July 2018. This sets out how we intend to implement our international commitments in UK law, and is part of our preparations for a smooth and orderly exit.
Once negotiations conclude on the Withdrawal Agreement and framework for the future relationship, the EU Withdrawal (Withdrawal) Act 2018 provides that Parliament will vote on the withdrawal agreement and future framework.
The government will provide Parliament with this vote on the final deal as soon as possible after the negotiations have concluded. If Parliament approves the Withdrawal Agreement and framework for the UK’s future relationship with the EU, the government will bring forward the EU (Withdrawal Agreement) Bill to give the Withdrawal Agreement domestic legal effect.
The procedures for approval and implementation of the Withdrawal Agreement and framework for our future relationship are set out in the white paper on legislating for the Withdrawal Agreement. In parallel a ratification process will need to take place in the EU.
What we mean by a ‘no deal’ scenario
While progress has been significant and we remain confident that a positive deal can be achieved, until both the UK government and the European Union sign a Withdrawal Agreement and it is ratified by the UK Parliament and the European Parliament, there remains a possibility that we may leave the EU without a deal in March 2019.
The UK triggered Article 50 of the Treaty of the European Union on 29 March 2017. As set out under that treaty, the UK has two years to negotiate a Withdrawal Agreement and framework for a future relationship with the EU before the point of the UK’s exit from the EU at 11pm GMT on 29 March 2019.
A ‘no deal’ scenario is one where the UK leaves the EU and becomes a third country at 11pm GMT on 29 March 2019 without a Withdrawal Agreement and framework for a future relationship in place between the UK and the EU.
In a ‘no deal’ scenario there would therefore be no agreement to apply any of the elements of the Withdrawal Agreement described above.
The UK is therefore preparing for a scenario where there is no UK-EU agreement in place on exit day.
Plans already in place
For two years government has been implementing a significant programme of work to prepare for all scenarios, including a potential ‘no deal’ scenario in March 2019.
The government has taken its responsibilities to prepare the UK for all scenarios very seriously. At the 2017 Autumn Budget, HM Treasury made £3 billion of funding available (£1.5 billion in 17/18 and £1.5 billion in 18/19) so that departments and the devolved administrations could prepare effectively for Brexit. This was in addition to £700 million previously made available for preparations over the course of the last two years.