The scope of ‘No Deal’ cannot currently be known. It covers a range of possibilities from no on-going relationship (including an immediate cessation of cross border transactions and transit) to a collection of sector/ topic based interim measures to preserve a form of status quo. 

Consequently ‘No Deal’ is not a single outcome. It may take different forms over time. Over time, the UK Government may be able to introduce bespoke solutions favourable to its economy/society (although this is unlikely in the short term as goodwill from the EU is expected to be low if a deal has not been reached following the extension to 31 October 2019.

Planning for ‘No Deal' is therefore difficult and businesses may need to take a flexible approach. For some businesses this may import substantial risk to ongoing operations in the short term. In the medium term it may provide opportunities for certain sectors.

In the context of ‘No Deal’, it is worth noting:

  • No country has ever left a major trading bloc in this way so there is no precedent and considerable uncertainty in numerous dimensions.
  • The EU has set out its formal legal position in Notices to Stakeholders covering a wide range of topics and sectors. These provide for the end of existing relationships and participation in relevant committees on Brexit. 
  • The UK Government has issued a similar set of documents. These highlight a wide range of immediate discontinuities arising from No Deal.
  • Third party countries are likely to want to understand the long term trading relationship between the UK and the EU before undertaking serious negotiations with the UK. Once such relationships are known it may be possible for the UK to negotiate bespoke deals with trading partners.
  • The EU has issued details of limited No Deal interim measures. The EU’s approach to No Deal is likely to be to preserve its own advantage, and limit damage to the EU. Further discussions or interim measures will be conducted in the context of a significant loss of trust.
  • Finding stop gap solutions with the EU is likely to be challenging and time consuming. The solutions are likely to be sub-optimal at least in the short term. In the longer term more solutions (including technologically based solutions) may become available.
  • Other member states are preparing contingency plans for use in a ‘No Deal’ scenario to reduce such delays, particularly in relation to the movement of goods and transport at borders.
  • There is likely to be considerable business and public pressure on the UK government to address the expected range of unwelcome and potentially serious consequences of No Deal in the short term. 
  • Words of comfort have been given by certain EU member states in relation to the rights of UK citizens who have been living and working in certain member states for a substantial amount of time in advance of exit day. So far, these words of comfort are not binding.
  • The UK has stated that any EU nationals settled in the UK as of exit day will be able to apply for a settled status scheme in which the individual is able to live and work in the UK so long as they do not exit the UK for longer than a two year period.

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