No-Deal Brexit: measures to arrest the drop in the event of a cliff edge

With Brexit Day barely more than one month away, it is still impossible to fathom whether the United Kingdom and European Union will reach an agreement. It is therefore perfectly understandable that central governments and administrations should be making preparations for a no-deal Brexit, this being the scenario by default, the probability of this outcome increasing by the day. In the event of a no-deal Brexit and without measures to cushion the shock, relations between the United Kingdom and the European Union would be governed immediately by WTO rules, financial institutions would lose their passporting rights (under which products and financial services are sold in the EU), the UK would cease to benefit from agreements between the EU and third countries, monster traffic jams would form around Dover and Calais, food prices would surge in the UK, queues reaching as much as 15,000 passengers would form each day at St Pancras International, etc. In short, the United Kingdom could face economic chaos. The European Union would also be seriously affected by this regime change. To address this eventuality, regulators on both sides of the Channel have drawn up continuity plans in order to arrest the drop in the event of a cliff-edge: it is in no one’s interest to trigger a major shock that would propel many countries into recession. By their very nature, these plans are provisional, with a variable period of application. They would not cushion entirely the shock of a no-deal Brexit, but they could reduce quite considerably the magnitude of this shock. The European Union like the United Kingdom have published many notes intended to prepare economic agents to the prospect of a no-deal Brexit. This guidance details the approach to be followed when engaging in cross border activities post-Brexit. As these notes have been commented at length in our Brexit Watch publications, this publication will not delve into them. Firms have also drawn up contingency plans to address the eventuality of a no-deal Brexit, but again this will not be addressed exhaustively in this publication. We recall first the main regulatory consequences of a no-deal Brexit, then the continuity plans or emergency measures drawn up for two sectors: financial services and transport. We recall finally that, in the matter of data transfers, no plan of any substance has been put forward.