U.K. Warns of Sweeping Risk of Chaos From No-Deal: Brexit Update

Robert Hutton, Alex Morales and Tim Ross Bloomberg•September 11, 2019

The U.K. published warnings of disruption to trade, financial services and food supplies if it leaves the European Union without a deal on Oct. 31.

The document, which also warns of the threat of public disorder, was produced as part of no-deal Brexit planning under the code-name Operation Yellowhammer. It was released on Wednesday evening after lawmakers voted to force Boris Johnson’s government to make it public.

Key Developments:

Johnson said he wants a deal with the EU but that the U.K. can manage without Scottish appeals court rules suspension of Parliament is unlawful,” setting up Supreme Court showdown German Chancellor Angela Merkel pledged to work until the “last day” to secure a Brexit agreement. The government said it would look “closely” at Hong Kong Exchanges & Clearing’s surprise bid for London Stock Exchange Must read: Four Ways Johnson Could Break the Brexit Deadlock

Shortages of Fuel, Food, Clean Water (8:35 p.m.)

There are risks of disruption to fuel supplies to London and the south-east, with localized shortages across the U.K., the no-deal Brexit planning document warned.

While the threat to the supply of clean water is “low,” it is possible that hundreds of thousands of people will experience problems. That could mean urgent steps are needed to shore up the water supply, the document said.

Food prices will rise, and certain types of fresh produce will be harder to get in shops. The issues are likely to be worst in the run-up to Christmas, the busiest time of the year for the food industry, and the government cannot anticipate all the potential impacts on the food supply chain, it said.

“There is a risk that panic buying will cause or exacerbate food supply disruption,” the document said.

‘Severe’ Risk to Irish Border Without a Deal (8:30 p.m.)

The U.K. expects Northern Ireland would be worst hit, with tariff and regulatory checks on goods moving over the border that would “severely disrupt trade” if there’s a no-deal split from the EU, the newly released document says.

The government accepts that its plan not to introduce border checks “is likely to prove unsustainable due to significant economic, legal and biosecurity risks.” It expects businesses to close, relocate or raise prices, leading to job losses, protests, and an increase in black market activity.

The effect of all that, the government says, will be “significant pressure” to return to the negotiating table with the EU “within days or weeks.” Meanwhile the government doesn’t see any hope that the EU will be feeling similar levels of pressure, as the document talks about “a small number of instances where the impact of Brexit could be felt negatively in the EU”.

Delays at Ports After No-Deal Split (8:15 p.m.)

Most of the government’s assumptions about no-deal Brexit problems flow from expected problems at ports and the Channel Tunnel. Here’s more detail about the expected problems:

Between 50% and 85% of hauliers won’t have the correct paperwork. Flow rate reduced to between 40% and 60% of current levels, as unprepared trucks fill ports. After three months, that flow rate would rise to 50% to 70% of current levels. Trucks face maximum delays of 1.5 to 2.5 days. Disruption expected to last for six months

No-Deal Risks to Trade and Public (7:50 p.m.)

The U.K. government expects a no-deal Brexit would mean the flow of traffic through ports would be more than halved on day one, with trucks delayed by as long as two and a half days, leading to disruption to food and medical supplies.

The disruption could last up to six months, according to the “reasonable worst-case assumptions”, which Parliament this week ordered the government to publish.

The document also warns of unspecified disruption to financial services, increases in electricity prices, possible protests, and clashes between fishing fleets from different nations. It says poor people will be worst affected by increases in food and fuel costs.

Johnson Says He’s Focused on ‘People’s Priorities’ (5:40 p.m.)

In his Facebook Q&A session, Boris Johnson also took questions on homelessness and the National Health Service, and stressed the importance of moving on from Brexit and dealing with the “people’s priorities.”

Among other things, he pledged to bring in a homelessness czar as well as a national plan to tackle the problem, and cited the importance of holding a Queen’s speech so the government can spell out its legislative priorities. Echoing his spokesman’s comments (see 1 p.m.), he said that was the reason for proroguing Parliament. His comments come after a Scottish court ruled the decision to do so was an unlawful attempt to stymie the legislature.