October 09, 2017
UK is starting to prepare for a no-deal Brexit
We have reached a news plateau in UK politics, where stories are still generated but are getting increasingly desperate. A quote by Theresa May that she wants to use all of the talent in the parliamentary party is being interpreted as a direct threat to sack Boris Johnson. That may well be, and it is possible that the journalists were separately briefed by Downing Street on May's current intentions, but the headlines cannot be deduced from the quote. What we do know is that Theresa May has for now managed to quell a potential rebellion by 30 MPs, who where willing to pass a vote of no-confidence on their leader. The next possible wobble could happen at the end of the year, if the Brexit negotiations were to stall. But, then again, the dilemmas for the Tory party will be the same then as they are today.
In Brussels, meanwhile, the next round of Brexit negotiations starts today. There is no expectation that the European Council will declare this month that sufficient progress has been made to move on to the next stage, but we would still argue that this is possible by December. In the meantime, there will be unofficial talks on the transition deal that would be formalised in December. By then, we should know whether the Brexit negotiations remain on track for a final agreement, or whether the process is hitting a serious crisis. The official views of France and Germany have not shifted, but these are negotiating tactics.
We noted a story in the Telegraph according to which Theresa May will release billions of pounds to enable preparations for a no-deal Brexit. This would occur early next year if there is no progress in the Brexit negotiations by then. The money would be spent on new technologies for customs clearance, air traffic control, and migration control.