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Countdown to Brexit: 49 Days - Theresa May visits Brussels to re-open her ‘Deal’

8 Feb 2019

The European Commission has responded to “the increasing risk that the United Kingdom may leave the EU on 30 March this year without a deal”. In anticipation of a no-deal scenario, the Commission has further extended its contingency planning to include the ‘Erasmus+ programme’, ‘social security coordination’, and the ‘EU budget’.

This follows the calls by the European Council – comprised of the 27 Heads of States from the remaining EU nations - to “intensify preparedness work at all levels” and their adoption of the European Commission's ‘Contingency Action Plan’. This includes a series of legislative measures and contingency proposals for EU fisheries. They come in addition to the extensive preparations by the European Commission that began in December 2017.

The measures will ensure that in the event of a “no-deal” scenario:

  • Young people from the EU and the UK who are actively participating in the Erasmus+ programme on 30 March 2019 can complete their stay without interruption;
  • EU Member State authorities will continue to take into account periods of insurance, (self) employment or residence in the United Kingdom before the date of the withdrawal, when calculating social security benefits, such as pensions;
  • UK beneficiaries of EU funding will continue to receive payments under their current contracts, provided that the United Kingdom continues to honour its financial obligations under the EU budget. This issue is separate from the financial settlement between the European Union and the United Kingdom.

It is important to note that these measures will not – and cannot – “mitigate the overall impact of a no-deal scenario - nor do they in any way compensate for the lack of preparedness or replicate the full benefits of EU membership or the favourable terms of any transition period, as provided for in the Withdrawal Agreement”.

The European Commission noted that: “Today's proposals are temporary in nature, limited in scope and will be adopted unilaterally by the EU.” They take into account discussions with the remaining EU27 Member States.

The risk is that the two sides are creating a self-fulfilling scenario. The UK and EU are each generating momentum towards a no-deal Brexit – a momentum that takes the decision out of the hands of politicians and into the hands of civil servants and business. A momentum that it may soon be impossible to stop – no matter that the majority of politicians don’t want a damaging no-deal exit on 29 March – in just seven weeks’ time.

A less reported quote from Donald Tusk is that the chances of stopping Britain leaving the EU were now close to non-existent because of the “pro-Brexit stance of the leader of the Opposition” and the lack of “effective leadership for Remain”. And there seems to be little chance of Theresa May’s ‘deal’ in its original November 2018 form being accepted on 14 February - especially after she voted against it herself last week.

Banks are beginning to move hundreds of billions of pounds of assets out of the UK because financial service regulations will soon lapse. Exporters in the Far East - whose ships take weeks to get to Britain - are getting ready to divert their cargoes to continental ports according to the Business Secretary: “because trade arrangements will soon be suspended”. Industry data universally shows that factories are stockpiling supplies - and the NHS is busy hoarding medicines.

The legal default is for Britain to leave the EU without a deal - unless someone comes up with a majority for an alternative — and there is no sign of the political leadership required coming from any quarter that might secure a majority.

As the timetable runs down, Britain risks a no-deal Brexit that few want but that may become unstoppable. It takes time to turn – and the lead-times necessary mean no-deal instructions are now being issued. One seasoned political insider who has closely studied the dynamics of Brexit now puts an 80% probability on a no-deal Brexit at 23:00 GMT on Friday 29 March.

Background

Erasmus+: is one of the EU's flagship programmes. On 30 March 2019, it is anticipated that there will be 14,000 young people from the EU27 - including students, trainees in higher education and vocational education and training, youth learners, and educational staff - resident in the United Kingdom thanks to the Erasmus+ programme. Some 7,000 UK participating students will be resident in the EU27.

In a strict no-deal scenario, they would not be able to complete their Erasmus+ terms - and may no longer be eligible for grants. The European Commission proposal aims to remedy this by ensuring that in a no-deal scenario, students and trainees abroad participating in Erasmus+ can complete their studies and continue to receive the relevant funding or grants.

Protecting citizens' social security rights: the European Commission has consistently made clear that the rights of EU citizens in the United Kingdom and UK nationals in the EU are its priority. They: “should not pay the price for Brexit.” Today's proposal aims to ensure that in a no-deal scenario, the entitlements of those people who exercised their right to free movement before the UK's withdrawal are safeguarded. These entitlements include periods of insurance, (self) employment or residence in the United Kingdom before the withdrawal. For example, this means that if an EU27 citizen worked for 10 years in the United Kingdom prior to Brexit, this period should be taken into account when his/her pension rights are calculated by the competent authorities in the EU Member State where he/she retires.

The proposed Regulation ensures that Member States continue applying the core principles of EU social security coordination - namely the principles of equality of treatment, assimilation and aggregation. Today's proposal: “by no means replicates the significant advantages of the Withdrawal Agreement that was agreed by the UK and EU on 14 November 2018. It does not cover rights accumulated after 29 March 2019 - nor does it cover the exportability of cash benefits, the continuous provision of sickness benefits in kind and the rules on applicable legislation.

Protecting the beneficiaries of the EU budget: As has been endorsed on many occasions, all commitments taken by the 28 Member States should be honoured by the 28 Member States. This is true in a no-deal scenario - where the UK would be expected to continue to honour all commitments made during EU membership.

Today's proposal enables the EU to be in a position - in a no-deal scenario - to honour its commitments and to continue making payments in 2019 to UK beneficiaries for contracts signed and decisions made before 30 March 2019. This is on condition that the UK honours its obligations under the 2019 budget and that it accepts the necessary audit checks and controls. This would help mitigate the significant impact of a no-deal scenario for the wide range of areas that receive EU funding, such as research, innovation or agriculture.

This issue is separate from - and without prejudice to - the financial settlement between the EU and the United Kingdom in a no-deal scenario.

Next steps

The European Commission will work closely with the European Parliament and the European Council to ensure the adoption of the proposed legislative Acts so that they are in force by 30 March 2019. The Commission also highlighted to the European Parliament and to the European Council that it is important for delegated Acts to enter into force as rapidly as possible.

Chronology

14 November 2018: the negotiators of the European Commission and the United Kingdom agreed on the terms of the Withdrawal Agreement.

22 November 2018: the European Commission approved the completed Withdrawal Agreement

25 November 2018: the European Council endorsed the Withdrawal Agreement (Article 50) and invited the European Commission, Parliament and Council to take the necessary steps to ensure that the Withdrawal Agreement can enter into force on 30 March 2019. This will provide for an orderly withdrawal of the UK from the EU.

It was noted that the ratification of the Withdrawal Agreement in the United Kingdom by Parliament is currently uncertain.

5 December 2018: the European Commission adopted two proposals for the Council to ratify, and sign in order to conclude the Withdrawal Agreement. For the Withdrawal Agreement to enter into force the European Council must now authorise the signature of the text on behalf of the European Union and the European Parliament must then give its consent before being concluded by the Council.

It was noted that the Withdrawal Agreement has failed to be ratified by the United Kingdom Parliament as required by its own constitutional requirements.

Ratification of the Withdrawal Agreement is the priority of the European Commission.

It was noted that irrespective of the scenario envisaged, the United Kingdom's choice to leave the European Union will cause significant disruption. Stakeholders, including 27 states and EU authorities need to urgently prepare for two possible main scenarios:

if the Withdrawal Agreement is ratified before 30 March 2019, EU law will cease to apply to and in the UK on 1 January 2021 – that is, after a transition period of 21 months. The Withdrawal Agreement includes the possibility for a single extension of the transition period for up to one or two years;

if the Withdrawal Agreement is not ratified before 30 March 2019, there will be no transition period and EU law will cease to apply to and in the UK as of 30 March 2019. This is referred to by the Commission as the “cliff-edge, no-deal” scenario.

The UK Government has published 104 no-deal Technical Notices. The European Commission has published a complementary set 88 sector-specific preparedness notices for the EU 27 remaining member states to inform the public about the consequences of the UK's withdrawal in a no-deal scenario. They are available in all official EU languages.

Today's proposals add 18 legislative proposals in the context of Brexit preparations and contingency planning.

The European Commission has held widespread technical discussions with the EU27 Member States both on general issues of preparedness - and on specific sectorial, legal and administrative preparedness steps. The slides used in these technical seminars are available on request.

The European Commission is now visiting each of the 27 EU Member States to ensure national contingency planning is on track - and to provide any necessary clarifications on the no-deal Brexit preparations.

Reference:

http://europa.eu/rapid/press-release_IP-19-743_en.htm

This article first appeared on the website for Brexit Partners (www.brexit-partners.com). 

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