Brexit: Europe’s no-deal preparation ‘falls short’, say businesses

Shelves of drugs in a pharmacy Image copyright Getty Images
Image caption The letter warns of possible medical supply shortages

Business lobby groups have written to the European Commission, warning that its own no-deal Brexit plans “fall short of what is needed to limit major disruptions”, Newsnight has learned.

The letter is from Business Europe – an umbrella body for lobby groups across the EU, including Britain’s CBI.

It warns of possible disruption to flights, drug supply shortages and data-sharing interruptions.

The Commission said it was in frequent contact with stakeholders.

But the document suggests European companies – not just UK firms – are extremely nervous about the economic repercussions of a no-deal Brexit on 29 March.

‘No one is ready’

The EU’s chief Brexit negotiator Michel Barnier previously said the EU was “ready to face” a no-deal scenario.

On 13 March, Mr Barnier said: “The risk of a no deal has never been higher… we are ready.”

But Nicole Sykes, the CBI’s head of EU negotiations told Newsnight: “No one is ready – not the UK, not the EU.”

She said urgency was “paramount” and that there “are ways to make sure that the costs for citizens on the UK and EU side are lower”.

The European Commission published its no-deal “Contingency Action Plan” on 19 December. This included plans for temporary regulatory roll-overs to keep air services between the UK and the EU running and also “equivalence” for financial derivatives and other financial services.

But Thursday’s letter from the Brussels-based business group makes it clear that, in their view, this planning has been insufficient. It says:

  • The Commission’s actions on aviation “may not be enough to prevent disruptions in the European aviation sector”
  • Responsibility for all UK drug import authorisations will have to pass to EU member states in a no-deal scenario and warns and “there will likely be a limited number of products at risk of supply shortages”
  • There are risks of a “disjointed approach” when it comes to the certification of imported medical devices, which would “inevitably create disparities in patient care across the EU”
  • There may not be the “capacity” to restructure contracts around corporate data flows – extremely important for cross-border services trades
  • Business is oncerned about the different approaches taken by EU Member States when it comes to keeping money flowing

Most economists believe that the UK economy would suffer more than the wider remaining EU economy in the event of a no-deal rupture, both in the short term and the long term.

But particular EU industries heavily reliant on imports from and exports to the UK could still be very severely and disproportionately hit.

Business Europe has asked to meet with the Commission’s deputy secretary general, Celine Gauer.

A spokesman for the Commission said: “We can confirm receipt of this letter and we will reply in due course. We are frequently in contact with stakeholders, including Business Europe.”

You can watch Newsnight on BBC Two weekdays at 22:30 or on iPlayer, subscribe to the programme on YouTube and follow it on Twitter.

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