September 12, 2018 / 11:15 PM / 11 days ago

'No-deal' Brexit would complicate driving, data and roaming, UK says

LONDON (Reuters) - Leaving the European Union without a divorce deal could increase Britons’ mobile phone roaming charges, upset data sharing and force motorists to get an international licence to drive in Europe, the government said on Thursday.

Pro-EU demonstrators protest outside parliament in Westminster London, Britain, September 13, 2018. REUTERS/Henry Nicholls

Recent signals from Brussels have buoyed hopes that the United Kingdom and the EU can agree and approve a proper divorce agreement before the UK leaves on March 29, though the sides are still divided on about one fifth of the detail of a deal.

But many business chiefs and investors fear politics could scupper an agreement, thrusting the world’s fifth largest economy into a “no-deal” Brexit that they say would weaken the West, spook financial markets and silt up the arteries of trade.

Britain has stepped up planning for the effects of such a departure and on Thursday published 28 technical notices here covering the impact on areas ranging from environmental standards to certification for manufacturers.

A “no-deal” Brexit, the government cautioned, would make life for UK citizens and businesses more complicated, more expensive and more bureaucratic.

British businesses, for example, would have to rush to ensure they could still receive personal data about European customers, while many manufacturers would need to have their exported products retested by EU safety regulators.

Brexit minister Dominic Raab said a no-deal Brexit was unlikely, but that the United Kingdom would manage the challenges and eventually flourish.

Still, the notices offer a glimpse of just how complicated the government believes the divorce could become after 46 years inside the European club.

The notices, often a few pages per sector, also covered the implications for space programmes, trading in drug precursors and reporting CO2 emissions for new cars.

“YET ANOTHER WAIT”

The British Chambers of Commerce welcomed the notices as providing more clarity but said businesses needed more precision from government in order to plan for a no-deal Brexit.

“Businesses now face the frustration of yet another wait for further answers,” BCC Director General Adam Marshall said.

“Many companies tell us they are deeply concerned by the impression that key information they need in order to prepare for change is being held back due to political sensitivities.”

For the public, Thursday’s notices covered more mundane issues; the government said British drivers might need to obtain an international driving permit to drive in the EU.

And it said surcharge-free roaming for mobile users could no longer be guaranteed after a no-deal Brexit, meaning consumers could be hit with higher charges to make calls, send texts and use mobile data when travelling in the European Union.

At a ministerial meeting to discuss the preparations, Bank of England Governor Mark Carney warned that British house prices would fall by 35 percent over three years in the event of a chaotic no-deal Brexit, The Times newspaper reported.

Carney said he would not be able to cut interest rates in such a scenario whilst finance minister Philip Hammond warned that he would not be able to use tax cuts to boost the economy due to the hit to the public finances, the paper said.

Pro-EU demonstrators protest outside parliament in Westminster London, Britain, September 13, 2018. REUTERS/Henry Nicholls

The BOE declined to comment.

Both sides need a broad overall agreement to keep trade flowing between the world’s biggest trading bloc and the United Kingdom, home to one of the world’s top two financial capitals.

A senior EU diplomat told reporters that EU leaders will discuss next week whether to hold a special summit on Brexit in November to give extra time to negotiate the deal with Britain.

He also said, when asked, that the EU was continuing contingency preparations for the event there was no deal.

Raab said the government would pay “substantially” less than the roughly 39-billion pound ($51 billion) Brexit bill if there was no agreement but that getting a deal was “still by far and away the most likely outcome.”

But Moody’s Investor Service said the probability of a “no-deal” had risen and such a scenario would damage the economy, especially the automotive, aerospace, airline and chemical sectors.

The other 27 members of the EU combined have about five times the economic might of Britain. They also have a strong incentive to deny the UK a deal so attractive it might encourage others to follow the British example.

DEAL OR NO DEAL?

As May tries to clinch a deal with Brussels, she is facing rebels in her Conservative Party who say they will vote down any deal that fails to deliver a sharp break with the EU.

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Raab told BBC radio he did not believe May’s government would lose a vote in parliament on the deal.

Michel Barnier, the EU’s chief negotiator, said on Monday that a Brexit deal was possible “within six or eight weeks” if negotiators were realistic in their demands.

Last month, the government published 25 technical papers out of a total of more than 80, which detailed how tariffs, financial services, state aid and pharmaceuticals would operate if Britain departs without a divorce deal.

Ever since the shock 2016 Brexit vote, major companies have been planning for Brexit, but chief executives say the scale of disruption from a disorderly Brexit is such that it is hard to prepare for.

Profit at Britain’s biggest department stores group, John Lewis Partnership, was wiped out in the first half as it was forced to match discounting by its struggling rivals on a fiercely competitive high street.

“With the level of uncertainty facing consumers and the economy, in part due to ongoing Brexit negotiations, forecasting is particularly difficult,” John Lewis said.

Brexiteers accept there is likely to be some short-term economic pain but say Britain will thrive in the longer term if cut loose from what they see as a doomed experiment in German-dominated unity and excessive debt-funded welfare spending.

Opponents of Brexit fear that leaving the bloc will weaken what remains of Britain’s global influence, further undermine its reputation as a haven for investment and hurt the economy for years to come.

($1 = 0.7629 pounds)

Additional reporting by Paul Sandle, Sarah Young, Alistair Smout, Michael Holden, Andrew MacAskill, David Milliken, Georgina Prodhan and Costas Pitas; Writing by Guy Faulconbridge; editing by Kevin Liffey

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