With a matter of days left before the UK leaves the EU on a no deal, much speculation has focused on what this would mean for Britain.
However, detailed plans have been drawn up by individual member states across the continent, trying to offset any potential damage caused by no agreement by March 29.
In Germany, the government decided to hire an extra 900 customs officials (trade unions claim that 1300 are needed) to prepare for no deal, but at the end of January, none of these had been employed yet.
‘In no other country is the effect on overall employment as big as it is in Germany’, economics professor Oliver Holtemöller has concluded, commenting on his study that said no deal would cause 100,000 job losses. It’s making German industry nervous. Eric Schweitzer, president of Germany’s chamber of industry and trade last month warned that ‘around 750,000 German jobs depend on free trade with the UK… without a deal, millions of Euros would be due in customs’ registration fees and billions in duty.’ This followed similar warnings from Germany’s car manufacturers and the BGA, which represents the German wholesale, foreign trade, and services sectors.
Perhaps German companies themselves are taking up the task then, if German government action is lacking? Unfortunately, that’s not the case. According to the German central bank, ‘many companies are so far insufficiently prepared for Brexit’. Some big companies are taking measures, but most haven’t made the expensive investments needed into new staff or IT. Germany’s central customs office is especially worried about how under-prepared small and medium-sized companies are. Meanwhile, the German farmers federation has warned that a no-deal Brexit, would create ‘chaos’ and have ‘enormous consequences’ for German farmers, due to the impact on the EU budget and market access restrictions.
Surely in France, where the government is more centralised, the situation is more under control? The French government has begun recruiting an extra 740 customs officials and veterinary inspectors. It’s also spending millions on security at ports and airports, and is passing legislation granting it the right to push through laws by emergency decree.
Nevertheless, Medef, France’s largest employer federation, thinks there will be severe trade disruption and ‘absolute chaos in Calais and other ports which export goods to the UK’ in the event of a hard exit.
Jean-Marc Puissesseau, the chief executive of the port of Calais, received a lot of attention when he claimed that the port ‘will be ready’ for no deal. ‘There will not be any delay’ for trucks, he declared. But it was only in March 2018 that he was claiming the opposite: that customs and sanitary checks could lead to 30-mile tailbacks.
His latest stance is likely in response to concerns that Calais may lose trade to its northern rivals in Belgium and the Netherlands. Xavier Bertrand, chairman of the Hauts-de-France region has basically corrected Puissesseau, stating there was a real danger the port could grind to a standstill, because ‘even at the moment you can see queues of more than half a mile to the tunnel and that is where there are no checks. Imagine what it will be like with checks.’
The National Federation of Road Transporters have pointed out that ‘the new buildings for the extra checks haven’t been built yet and we just don’t know if things will be ready for March 30.’ They also worry that if there are more lorries backed up on roads, it will be harder to stop migrants desperate to reach the UK from trying to sneak in.
That doesn’t really sound like France is ‘ready’ at all.
In the Netherlands, often portrayed as a Calvinist nation where everything is orderly and planned, the Dutch government aims to boost its customs force by around 20 per cent, hiring 928 extra staff. However, only around one third of those will be deployed by the end of March, and only two thirds of the 143 additional staff for the Food and Consumer Product Safety Authority will be ready to help by Brexit day. This, amongst other things, has led the Dutch Court of Audit to criticise the government in December, also highlighting that ‘it will only be possible for new recruits to be operational under guidance. This because they have only had a new, shortened training.’
Despite the fact that the Dutch government has started a campaign featuring a fluffy blue monster, including a comprehensive website, urging companies to prepare, only a minority of Dutch industrial companies are ready for Brexit, a KPMG survey revealed.
The Dutch government is busy implementing legislation to prepare for no deal, but it has faced resistance from the Dutch Parliament over the sizeable powers it grants to the executive. One of the measures being taken is to grant UK-based asset managers a temporary exemption for providing services in the Netherlands in case of no deal.
The Dutch Central Bank has prepared a survey on the preparations of the Dutch financial market for a possible no-deal Brexit. Their concern is that many Dutch financial institutions use the derivatives markets in London to hedge their risks, and large Dutch insurers and banks’ risk losing access to those clearing house. Europe’s markets regulator ESMA has, however, been showing flexibility, stating that three UK clearing houses can continue to provide services to the EU after March 29, even if there is no deal.
There still are quite a few unresolved challenges regarding no deal, which could cost every Dutch citizen 164 Euros a year, and may lead to a shortage of medicines and medical supplies. A hospital federation has warned ‘we foresee great risks for our daily operations if Britain leaves the EU without a deal… This varies from medicines, tissues and medic
cal supplies becoming unavailable, to problems with data storage and the registration of doctors. The safety of patients is at risk.’ Another hospital federation admitted last month it did not even have a clear idea of the scale of the problem yet.
Europe’s largest port, Rotterdam, handles around 40 million tonnes of goods to and from Britain, and has pointed out that major traffic jams could be caused by no deal, due to lack of space for trucks without the right paperwork and for inspections of goods arriving from the UK. The CEO of the port complained that ‘real talks about how both sides will handle the implications of Brexit were impossible as long as the negotiations between Britain and the EU went on’.
Belgium is particularly vulnerable to no deal. Their central bank has warned it could hit its GDP by 1.2 per cent and lead to 40,000 jobs losses. The government is preparing emergency legislation and has requested the EU Commission to exempt it from EU state aid rules in case of no deal.
Plans to hire to hire extra customs officials and to make sure they are ready by April 2019 are not going smoothly. Last month, trade unions representing customs staff accussed the government of being ‘completely unprepared’. In an optimistic scenario, Belgium will be able to deploy 141 out of the 400 extra customs staff needed by the end of March. Another challenge for Belgium is to find enough new veterinarians to inspect animals at the border, as the Netherlands is also attracting veterinarians from Belgium.
Belgian industry isn’t exactly well prepared either. Last month, one survey found that four in five Belgian companies dealing with the UK are not ready to cope with a no-deal Brexit.
The Belgian medical profession is also worried. Belgian hospitals are stockpiling medicines to prevent shortages and there is a worry that medical equipment, like pacemakers or catheters, may no longer be certified if it’s imported from the UK.
The stakes to avoid no deal are higher for Ireland than for any other EU member state. Not only is there the potential economic cost – estimated at 4 per cent of Irish GDP – but also the risk to the peace process in Northern Ireland. There is even the risk that no-deal border checks would move from Ireland to France or Netherlands. Leo Varadkar, the Taoiseach, has apparently told Irish party leaders in private that this may happen, amid reports that German Chancellor Merkel and other EU26 policy makers are considering it as a policy. There are also rumours – which have been denied – that the Irish government has been drafting emergency plans to deploy uniformed police to the border in the event of no deal.
Around 1000 extra customs staff are being hired by the government, but Taoiseach Varadkar already admitted last summer that it wouldn’t be possible to deploy them by the end of March.
Other member states
Other member states that aren’t likely to be as affected by a no-deal Brexit have also taken measures. This ranges from pushing the EU institutions to secure fisheries access – which is a Spanish concern — to taking national measures to secure the settlement of financial transactions, which Sweden has done. Hiring extra customs staff is something that’s being done by the likes of Latvia and also Denmark, which has even put money aside to pay into the EU budget in case the UK doesn’t. If that isn’t the behaviour of a model EU pupil, what is? Like most member states, Austria is trying to help companies with possible customs bureaucracy, and it may even allow Austrians citizens living in the UK to have dual nationality in case they become British subjects. Most EU member states have also provided reassurance to Britons living in the EU27, saying they can stay in the case of no deal, including Greece. Even in Italy, where the stakes aren’t that high, the ‘sovereignist’ government coalition is considering a bilateral deal with the UK to safeguard financial stability and keep trade with the UK flowing even if there is a no-deal Brexit.