(Editor’s note: Well, that didn’t go well. At 73 days till Brexit, odds for a no-deal breakup with the European Union just skyrocketed as the British Parliament votes down Theresa May’s deal to leave. Countries including Great Britain, Germany and the Republic of Ireland are preparing worst-case scenario plans to deal with the expected chaos.)
When the Brexit vote came up on 23 June 2016, we went to bed that night thinking this wasn’t a big deal. Who in their right mind would vote to leave the European Union, the largest, richest and most frictionless single economy in the world?
We awoke to the answer on 24 June 2016: A majority – 51.9 percent – of the voters in the United Kingdom, or more than 17 million people.
In the runup to the election, United Kingdom Independent Party leader Nigel Farage (who has a German wife and several French mistresses), Boris Johnson – later (briefly) foreign secretary – and others on the Far Right had convinced the British people the EU was the bête noire, responsible for all the UK’s troubles.
Leaving the EU would mean an extra 350 million pounds each week for the National Health Service; the UK would get a Brexit dividend and would soon be able to cut taxes with the windfall from brilliant new trade treaties around the globe.
What was billed as “the easiest negotiations in human history” took two and a half years as Prime Minister Theresa May’s government discovered what those Remoaners suspected – divorces are bitter to the end.
As we move ever closer to 29 March 2019, May’s agreement to leave the EU is dead at 72 days out, voted down by the biggest margin in modern British history. Now Mrs. May has three working days to present a Plan B to parliament which includes delaying Brexit into the summer of 2019.
The likelihood of a “hard” Brexit increases every day, with the UK leaving the EU with no trade, transportation or freedom of movement agreements whatsoever. Which will have ramifications for expats across Europe and beyond.
This is a particularly fraught moment as May has negotiated a deal with the EU to the approval of absolutely no one.
If the outlook for the United Kingdom was uncertain before 15 January 2019, the Eight Ball now is reading, “Expect anarchy.” The New York Times has a nifty infographic/post outlining the various scenarios including a no-confidence vote and May’s government getting shown the door.
So we’ve started a running update of Brexit developments:
• With little doubt that May’s deal was dead on arrival, most of the largest financial institutions have begun Brexit exits to Germany. Those include Among banks that announced plans to relocate some of their EU operations to Frankfurt are Citigroup, JPMorgan Chase, Morgan Stanley and Standard Chartered.
• With less than three months before Brexit, everyone including Brexiteer Michael Gove is warning it’s not going to be pretty. Gove warned that Brexit will leave the UK’s farmers in a pickle, so to speak. “No-one can be blithe or blasé about the real impact on food producers in this country of leaving without a deal,” Gove told the BBC.
The Republic of Ireland, which of course remains in the EU, is ramping up efforts to make sure Brexit doesn’t cut off the supply of medicines. And the DUP, a right-wing party in Northern Irelands aligned with May’s Tories, voted against her deal as expected.
• More companies are now following through on vows to move to continental Europe because of Brexit. Warren, N.J.-based insurance giant Chubb Group is the latest to announce it’s relocating operations to Paris. And leaders of the UK’s 150 universities are warning it will take decades for them to recover from Brexit.
• At the 100-day mark, the EU finally blinked … kind of. EU officials revealed their no-deal Brit contingency plan. The 14-point barebones plan will make sure flights between the UK and the EU just don’t stop dead, and EU officials have agreed to honor for a brief time some UK financial regs, according to the BBC. The post quotes EU Commissioner Valdis Dombrovskis as saying the measures “an exercise in damage limitation.”
• The British government has moved to call out the troops. 10 Downing Street told CNN on 18 December that 3,500 troops will be on standby in case the wheels fall off on 29 March 2019. The May government is sending out advice to households during the next few weeks, and businesses will have access to a 100-plus page document online to help them prepare. The government will send emails to more than 80,000 businesses most likely to be affected, CNN reported.
• On 11 December, May went to renegotiate the Brexit agreement that Parliament didn’t pass, and EU officials say they’ll never renegotiate. As you can imagine, that didn’t go well.
• A video on Youtube by TLDR News (above) argues the only way to avoid Brexit is through a second referendum. TLDR News breaks down complicated subjects to help the public comprehend them. As one viewer noted, “How is it that you are able to explain this in plain English, but the British government is not?”
• On the day May presented the draft agreement to parliament, the guy who oversaw Brexit quit. Brexit Minister Dominic Rennie Raab – the son of a Czech-born Jewish refugee who escaped the Nazis, and who is married to a Brazilian Google executive – said he could no longer support the deal, which Raab said has “two fatal flaws.” Which he negotiated. Monty Python couldn’t have written a more absurd script.
• On 31 October – Halloween, appropriately – the Guardian reported that Manhattan-based rating agency Standard & Poor’s warns that a no-deal Brexit would plunge the U.K. into recession, send unemployment skyrocketing, home prices lower and office leasing rates off the cliff. Oh, and for good measure, Britain’s credit rating would be downgraded.
• The New York Times has a post about a new phenomenon – Brexit Preppers. They’re the Brits who are hoarding food, medicine, toilet paper and other supplies, preparing for the disruption of supplies likely after a no-deal Brexit.
From the post:
“People are talking about World War II and rationing,” said Ms. Mann, a former midwife. “People have also been talking about the blackouts in the 1970s, and how power was rationed. This has the potential of being a combination of the two,” she said.
• Scottish First Minister Nicola Sturgeon said in a 15 October speech at the Royal Society of Arts in London that Scotland voted overwhelmingly to remain in the EU. In the event of what she calls “a blindfold Brexit,” “Scotland must have the option to choose a different course, as an independent member of the EU.” Make of that what you will.
You can see her full speech here. It’s worth a close read as it might be a harbinger of things to come in the UK as Northern Ireland and Scotland voted to stay, while Wales voted to leave.
• San Francisco-based Wells Fargo became the latest global financial giant to announce it was shifting its European operations to mainland Europe from London. Wells Fargo announced 15 October that it will open a subsidiary in Paris post-Brexit, according to The Financial Times.
• Former Conservative Prime Minister John Major said in a 15 October speech to the Foreign Office that Brexit is “a colossal misjudgment that will diminish” the UK while also threatening its future existence.
• On 20 September, European Union leaders including French President Emmanuel Macron told Prime Minister Theresa May her Chequers Plan is unworkable, increasing dramatically the chances of a no-deal Brexit. Or as CNN phrased it in their headline, “Brexit was sold by ‘liars’ and Britain’s exit plan is unworkable, UK told.” The remarks came during a Brexit Summit in Salzburg, Austria.
• Bank of England Gov. Mark Carney stated a no-deal Brexit could lead to a housing crash in Britain and other financial issues comparable to that of the 2008 financial collapse. The BOE carries out “stress tests” to check whether the banking system can withstand extreme financial shocks.
The most recent from November 2017 predicted a 33-percent fall in house prices could occur in a worst-case scenario, according to the BBC. Carney’s worst-case scenario was that house prices could fall as much as 35 percent over three years, a source told the BBC.
• On Sunday, 9 September, The Times of London published details of a leaked report from the National Police Co-ordination Centre. The report warns that in the event of a no-deal Brexit, the military might have to be deployed to back up police to quell civil unrest after food and other necessities start disappearing from British shelves. The NPCC report warns that traffic jams at ports could lead to “unprecedented and overwhelming” disruption to the road network.
• Speaking of goods disappearing, the Financial Times is reported Sunday that British businesses would have to stock 40 billion pounds worth of imports to preserve inventories in case of a no-deal Brexit. That increase in business would lead to a spike in the economy, followed by an equal and opposite reaction – a dip as business activity post-Brexit decreased, according to the Centre for Economic and Business Research.
The FT quoted Douglas McWilliams, CEBR founder, as saying, “This makes a post-Brexit mini-recession almost inevitable.”
• You knew this was coming … a warning Brexit would deny Ed Sheeran’s global fan base access to his new music. Wait, this is serious. The New Music Express, or NME as it’s now called, reports the British Phonographic Industry trade group is warning a no-deal Brexit could be catastrophic for Britain’s music industry, which is huge.
Who knew that UK-based artists account for one out of eight albums sold globally in 2017!
• On 6 September, several British media outlets including Sky News revealed the existence of Operation Yellowhammer, the May government’s planning for a worst-case, no-deal Brexit scenario. That plan includes messaging to reassure financial markets to keep them from collapsing.
The plan also calls for instituting budget austerity, with taxpayers funding emergency measures such as stockpiling pharmaceuticals and other essentials.
Operation Yellowhammer is the work of the Civil Contingencies Secretariat, designed to plan for emergencies and disasters.
• On 23 August, then-Brexit Secretary Dominic Raab sent out 24 technical notes he called “practical and proportionate advice” in case the UK leaves the EU without a deal. Raab’s release of the documents was meant to demonstrate to the British public that adults are in charge, with plans to ameliorate the worst effects of a no-deal Brexit.
Why, “the vast majority” of consumers won’t even notice any impact, Raab said, apparently referring to Brits who don’t fly, eat food, work for a living or make credit card purchases.
“People and businesses should not be alarmed by no-deal planning and preparation, nor read into it any pessimism. Instead, they should be reassured that we are taking a responsible approach, ensuring the UK’s exit can be as smooth as possible in all scenarios.”
• Unfortunately for Raab, the very same day, May’s Chancellor of the Exchequer Phillip Hammond stated in a letter to Tory MP Nicky Morgan, chairwoman of the Common’s Treasury Committee, that a no-deal Brexit will mean a 7.7 percent decrease in the UK’s GDP over the next 15 years.
To put that in perspective, the real GDP contracted by 4.2 percent between late 2007 and mid-2009 during the U.S.’s worst economic downturn since the Great Depression.
From Hammond’s letter:
Under a no deal/WTO scenario chemicals, food and drink, clothing, manufacturing, cars, and retail were estimated to be the sectors most affected negatively in the long-run, with the largest negative impacts felt in the North East and Northern Ireland.
Bottom line: Government borrowing is projected to increase by 80 billion pounds per year by 2033 to cover the budget shortfall in order to simply maintain the status quo.
Just in case you’re not depressed yet, here are a few more details from Raab’s soothing words to the British public concerning a no-deal Brexit as reported by the BBC:
• UK citizens living in the EU could lose access to payments and pensions from UK banks unless the EU passes its own new regulations.
• The cost of credit card payments between the UK and EU will “likely increase” and won’t be covered by a ban on surcharges. Credit card users could be hit with a new “Brexit tax” – about 166 million pounds.
• Businesses trading with the EU should start planning for new customs checks, and – by the way – might want to invest in new compliance software.
• The UK’s organic food producers could face new hurdles to exporting to the EU.
• Pharmaceutical companies have been told to stockpile an extra six weeks’ worth of medicine to ensure a “seamless” supply.
Kind of lost in all this good news is that a no-deal Brexit has rekindled talk of Scottish independence.
Scottish National Party leader Nicol Sturgeon tweeted:
That a ‘no deal’ Brexit would be an unmitigated disaster – and the fact that UK govt is even talking about it – is evidence of their abject failure. That they once had the nerve to tell us that independence threatened our place in Europe adds insult to injury. Scotland deserves better.
The essential question is, will the Tories come to their senses before the UK goes over the cliff? Most British and international business leaders have opposed Brexit from the start. And banks and financial giants have already begun the exodus to Amsterdam, Paris, Frankfurt and Luxembourg City.
If there is a movement for a revote, it will have to be led by a Tory … and there are few Tories outside David Cameron, Dominic Grieve, John Major and Morgan who are willing to say out loud that Brexit could be the biggest strategic mistake the UK has made since the Battle of Yorktown.
The best posts we’ve read on Brixit:
• “Brexit — #Brexcrement horrors and howlers” by Rob Mudge condenses all the hilarity of Brexit into a five-minute read of hypocrisy, flipflops and outright lies.
• Brexit: Britain’s atavist revolution. Sam Natapoff on Salon.
• Think we can rewind to the heady days before Trump and Brexit? Think again. Gary Younge in The Guardian.