Brexit secretary Dominic Raab today warned a “no deal” Brexit is possible if talks fall through by October even as Prime Minister Theresa May steps up efforts to secure EU backing for her Chequers compromise.
Raab said that “any responsible government” would plan for a breakdown in negotiations, even if it is aiming for a trade deal with the EU.
Mays ministers will launch a charm offensive on European capitals in an effort to build support for the compromise plan, agreed at the Chequers residence, with the 27 remaining EU member states. Over the weekend the Prime Minister said the government must “step up the pace of negotiations” and warned of a ticking clock.
Read more: FCA: Banks should prepare for no deal
Foreign secretary Jeremy Hunt will travel to Germany, home secretary Sajid Javid will go to Spain and David Lidington will visit France this month. Meanwhile, Raab will continue discussions with Michel Barnier, the European Commissions chief negotiator, on Thursday.
The Prime Minister has been forced to contend with pressure from businesses and economists to secure a deal on one side, along with fury from Brexit-backing MPs on the other. Ministers including former foreign secretary Boris Johnson and ex-Brexit secretary David Davis resigned because of the perceived closeness of the relationship envisaged by May.
Meanwhile, Labours shadow business secretary Rebecca Long-Bailey today said "no deal should not be an option." She added: “A no deal would be absolutely catastrophic for industry”.
Yet Davis today warned the government is “going to have to start again” on working out a Brexit position. He said the government should “composite the best bits” from existing trade deals to present a “Canada plus plus plus” offer to the EU, in an interview with the Sunday Express. He also advocated raising pressure on the EU by keeping the no deal option until after the EU Councils October summit, which is being treated as the next big deadline by the government.
Read more: Exclusive: EU mulls extension to Article 50 over no deal fears
The government has already hired thousands of extra officials to cope with the Brexit workload, and it plans to send out 70 “technical notices” detailing the preparations necessary by British citizens and businesses in the event of no deal. Raab, speaking today to the BBC, did not directly deny reports that the government is considering plans to stockpile food and turn the M26 motorway into a lorry park in the event of no deal.
The UK's largest business groups have made it clear that a "no deal" Brexit is expected to be damaging. Allie Renison, head of Europe and trade policy at the Institute of Directors, said failure to reach a deal "would present a significant step back for businesses".
However, she added that "it remains a possible outcome, and so providing guidance on what preparations can be made is necessary. No deal would be bad, but no deal with no planning would be worse."
"It is essential that both sides make urgent progress on both the withdrawal agreement and future relationship framework in parallel. We urge the EU to respond constructively to the government's white paper, and for the government to provide more detail on services access, VAT arrangements and put forward a comprehensive alternative for the current Irish backstop text."
Meanwhile, the British Chambers of Commerce (BCC) is urging smaller firms in particular to plan for every eventuality, including no deal.
“What business wants is their practical, real-world questions answered,” including on value-added tax, access to talent and customs, BCC director general Adam Marshall told City A.M.
Read more: Mark Carney warns of "big" impact from Brexit no deal
“Quite a few businesses are putting plans on hold” because of uncertainty over the future trading relationship, he added.
Carolyn Fairbairn, the director-general of the Confederation of British Industry, told Theresa May to stay firm on the deal outlined in the Chequers agreement, saying it gives a "decent baseline" for businesses.
However, the continued possibility of no deal gives firms “no choice but to trigger contingency plans for a cliff edge Brexit next March”, she said in the Sunday Times, pointing to a squeeze on warehousing space, job moves and cancelled investment is being cancelled.
“No deal should not be an option,” said Labours shadow business secretary Rebecca Long-Bailey. “A no deal would be absolutely catastrophic for industry”.
Read more: Brexit: Commission to ramp up no deal warnings
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