Brexit no-deal: The five key questions you need answered
No-deal scenario will move a lot of the pain into a shorter period and increase costs
The Government estimates a no-deal Brexit could cost the exchequer more than €6 billion next year. Photograph: iStock
Why is there another no-deal Brexit plan from the Government ?
The Government has already published a number of plans for a no-deal Brexit, notably in the run-up to the last deadline in April. However, the message is that more time has allowed for more preparations, for example at the country’s ports, to tie down the reciprocal rights of Irish and UK citizens and to put in place aid programmes for businesses. Tuesday’s no-deal update is gloomy, warning that there is an increased chance of such an outcome and that it would be “highly disruptive” and have “profound economic and legal implications.”
Why is the Government doing this?
Partly as a political exercise to demonstrate what it is doing and partly because it wants to scare the life out of businesses trading with the UK. Some have prepared but many have not, with thousands of smaller firms – up to 50,000, estimates the Irish Exporters’ Association – not even having applied for the so-called EORI [Economic Operators’ Registration and Identification] number, the registration necessary for trading outside the EU. The document warns of likely severe delays at ports in Ireland, the UK and France, all vital for Irish businesses importing and exporting not only from Britain, but also Continental Europe. An agreement has been tied-up with the ferry companies that trucks heading for Ireland from the UK will not even be allowed to board unless they have undertaken the correct customs clearance procedures.
What was said today on the Border?
Not a huge amount, but what was said was significant. In the event of a no-deal Brexit, the Government has indicated that it will try to achieve two goals – avoiding a hard Border and retaining full Irish membership of the EU single market. This is difficult because once the UK leaves the EU, checks on some goods will have to be conducted as they enter the EU market.
Today’s document says that to maintain Ireland’s full participation in the EU single market, checks in relation to tariffs, customs and food and animal safety on goods entering from the North will need to be conducted – and that these would be significant and disruptive. This is an important signal and a clear sign that Ireland will not compromise its membership of the EU single market, even if it means some checks on cross-border goods movements. But there is no detail on where and how these checks would happen. When discussing Brexit with Irish ministers and officials it remains a case of “don’t mention the Border.”
In relation to customs and tariffs, checks may be possible at company premises as goods leave and arrive, though some spot checks will also be necessary as products move .
However, it is in the area of animal and food safety checks that the greatest difficulty emerges, with EU rules stating these must be conducted on entry to the EU. The Government has indicated it recognises the checks are necessary – Tánaiste Simon Coveney said we will have to take “some action, somewhere” – but is continuing to talk to the European Commission about how and where this will happen and remains opposed to any infrastructure at or near the Border. How to square this circle will be a vital issue in the weeks ahead – and there is no certainty here for businesses trying to plan.
What is it all going to cost ?
We have already heard in the pre-budget report last week that this is a huge economic issue too, pushing the budget into deficit and threatening as many as 55,000 jobs. An organised Brexit under the withdrawal agreement would mean a gradual but significant hit to growth and jobs over a period of years. A no-deal Brexit would increase the cost and move a lot of the pain into a shorter period, starting at the end of October, if that is when it occurs. Significant and immediate threats would face some key sectors, notably large parts of the food trade which would face the threat of tariffs – damaging import taxes – which could price much of their product out of the UK marketplace. Some special funds are already in place to help businesses, but we now learn that the EU competition directorate has a special task force in place which will examine requests for assistance for companies hit on a case-by-case basis. Much of the cash would come from the Irish exchequer, of course.
The Government has already estimated that a no-deal Brexit could cost the exchequer more than €6 billion in total next year, leading to a deficit of between 0.5 and 1.5 per cent of GDP.
Anything else ?
Do you shop online UK sites? In future you will have to pay VAT on arrival – as happens now with non-EU sites. Returning products to the online retailer will get a lot more complicated, requiring proof that you re-exported the goods to get your tax back. Supply of retail goods into the Irish market is being discussed by industry players and governments but will face challenges, and some UK products may disappear from our shelves. In aviation much remains to be sorted out, including EU clearance of ownership structures of airlines operating here. To drive in the UK, including the North, you will need either a green card or proof of insurance. And on it goes. The key thing about Brexit is that it crosses so many areas.