Sunday 18 August 2019

Brussels hardens position on no-deal Brexit amid dire economic warning

Britain's prime minister Boris Johnson. Photo: AFP/Getty Images
Britain's prime minister Boris Johnson. Photo: AFP/Getty Images

James Crisp and Hugh O'Connell

Brussels now believes Britain will leave the EU without agreement and is operating on "a working hypothesis of no deal" after a meeting yesterday between European Commission officials and Brexit diplomats from the other 27 EU members.

"Our working hypothesis is no deal," said an EU source yesterday after a meeting with meetings with David Frost, Boris Johnson's senior adviser.

"It was clear the UK does not have another plan," a senior EU diplomat said of the meetings with Mr Frost. "No intention to negotiate, which would require a plan. A no-deal appears to be the UK government's central scenario."

EU officials are now viewing the October summit in Brussels as the "no-deal Brexit summit", whereas before they had expected leaders to mull over a British request to extend Article 50.

The EU had already said in March that it had completed its no-deal Brexit plans - 46 measures designed to mitigate the worst impact. They cover the financial sector, transport and travel, customs and the export of goods, climate policy, agriculture and fisheries, social security and international trade.

They include plans to ensure the most basic form of flying rights between the EU and the UK, allowing airlines to fly between UK and European cities but not onto other EU destinations nor will they be allowed to take new passengers to non-UK places.

UK-licensed trucks will be allowed to carry goods into the EU until the end of 2019 but will not have cabotage rights, when goods are transported within a country by a foreign operator.

Meanwhile, the Government is being warned that the actual affect of Brexit on the Irish economy may be far worse than many of the projections published so far predicted.

The latest national risk assessment, published yesterday, has warned of the potentially crippling impact of Brexit across a wide range of concerns, including business, households, the labour market and the public finances.

The report describes Brexit as "an event without precedent in modern economic history" and therefore quantifying the effect of this is "challenging".

The report warns: "It is important to recognise that such estimates may not capture the full impact, and the figures may be conservative."

It describes the deterioration in Ireland's fiscal balance as being structural, not cyclical, in nature - which in effect means the size of the Irish economy would be permanently affected by Brexit, with knock-on impacts on the amount of tax revenue coming into the Exchequer.

The dire warning comes as Taoiseach Leo Varadkar visits Belfast today for the second time a week, with Brexit and its effect on the North and Border likely to top his agenda.

Irish Independent

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