Date
March 20, 2019

While the precise trajectory of the UK's departure from the EU remains unclear, and the extent of its impact is difficult to ascertain, it remains possible that the UK will experience a "no-deal" exit March 29. Such a scenario could prompt short-term travel and freight disruptions, as well as shortages of certain goods. Nevertheless, the major result of a no-deal Brexit will likely be its medium-term negative impact on the UK economy, which could see a consequent rise in crime and incidents of civil unrest.

 

Key Judgments

  • Unless the EU agrees to Prime Minister Theresa May's planned request for an extension of the Article 50 notification period, the UK will leave the EU on March 29 without a formal withdrawal agreement or transitional period.
  • While a no-deal Brexit is unlikely to lead to a significant deterioration in the UK's security environment, a likely contraction of the UK's economy could prompt statistically significant increases in crime and civil unrest.
  • In the event of a no-deal Brexit, travel and freight disruptions are likely in the short-to-medium term as the UK and EU adjust to their new trading relationship.

 

Short-term Outlook

In a non-binding vote March 13, the UK Parliament opposed leaving the EU without a withdrawal deal to facilitate the country's transition outside the bloc; nevertheless, the UK is currently legally scheduled to leave March 29. Prime Minister Theresa May's draft withdrawal agreement, negotiated with the European Commission, would see the UK remain a participant in the Single Market and other EU institutions, with frictionless cross-border movement of goods, services, and people continuing as before until the end of the deal's transitional period, currently scheduled as Dec. 31, 2020. However, Westminster has rejected the agreement twice so far, and the short-term prospect of the deal passing the UK legislature without significant amendment is bleak.

The prime minister has asked the EU for an extension of the Article 50 notice period until June 30; her request will be discussed at the European Council meeting March 21-22. While not guaranteed, the remaining EU-27 members are likely to approve a short-term extension rather than see a no-deal exit. At the very least, such an extension would allow EU businesses and institutions additional time to prepare for an ultimate no-deal Brexit. If the extension is granted, the UK will remain a full participant in the EU trade architecture until the expiration of any new Article 50 notice period. If the EU refuses an extension, the UK will officially leave the bloc without a deal on March 29. If the EU agrees, the UK could still leave without a deal when the extension expires. A no-deal outcome would likely cause disruptions, with freight and customs inspections being the most severely affected. However, these disruptions would likely have a less immediate effect on travelers.

 

Potential Disruptions to Travel

To minimize potential disruption to aviation in the event of a no-deal Brexit, the EU is introducing legislation allowing UK carriers to overfly EU territory and continue to service EU destinations. However, additional security and customs checks at UKEU crossing points could cause delays in the short term, particularly for individuals traveling from the UK to the EU.

Although the future status of travelers is unclear, in the event of a no-deal Brexit, short-term travel arrangements between the UK and the EU will likely come into in effect, allowing up to 90 days' visa-free travel. Similar arrangements currently exist between the EU and a range of non-EU countries, including Kazakhstan and Ukraine.

However, the UK Foreign and Commonwealth Office has warned UK citizens that a no-deal Brexit would change UK passport validity rules for travel to the Schengen Area. Some passports with less than 15 months' validity remaining may not be accepted for travel. Officials advise people to check with the UK Passport Service before booking travel. EU countries have also created precautionary guidance for their citizens traveling to the UK. Ireland and the UK comprise a bilateral Common Travel Area, and the rights of Irish citizens to enter the UK and vice versa will remain unaffected.

All sides have committed to guaranteeing the rights of EU and UK citizens in each jurisdiction regardless of the outcome. After March 30, deal or no deal, EU citizens and their families will be able to apply to the EU Settlement Scheme to continue living in the UK after June 30, 2021. Each successful applicant will receive either settled or pre-settled status. Citizens from outside the UK/EU are unlikely to be impacted. In addition, the UK has reached an agreement with EFTA states (Iceland, Liechtenstein, Norway, and Switzerland) guaranteeing the rights of 15,000 EFTA citizens in the country. The remaining EU-27 members are each creating legislation regarding UK nationals in the absence of an EU-wide withdrawal agreement. Any new laws are very likely to require UK citizens living in the EU to apply for residency permits, and the timelines of such applications will likely vary according to national jurisdiction.

 

Increased Customs Inspections for Freight

Preparations for increased customs inspections for freight, particularly maritime transport, between continental Europe and the UK are reportedly inadequate. This deficiency could lead to supply chain disruptions between the UK and EU following a no-deal Brexit. The Irish government has vowed that there will be no hard border with Northern Ireland, and land travel between the two countries will likely be unaffected. However, additional security and customs checks on the EU side of the English Channel will likely delay rail and road goods shipments heading from the UK to the EU. The British government has committed to a short-term "continuity policy" for EU goods entering the UK, and such shipments are therefore less likely to be impacted; it is possible that the EU could reciprocate in the short term. Nevertheless, shipments from the UK could be tied up awaiting clearance to enter the EU, which would absorb freight capacity, particularly road haulage, and impact distribution of goods heading from the EU to the UK.

 

Possible Shortages of Essential Goods

Lack of available distribution capacity could prompt shortages of essential goods, including pharmaceuticals, in the UK, as hauliers would be unable to deliver shipments to retailers. Such shortages will likely be mitigated to some extent as many private enterprises and public sector departments in the UK have been building precautionary stockpiles. Such stockpiles, however, are not appropriate for goods with a short shelf life - including perishable foodstuffs and some medications - and some shortages of such items are possible. In addition, panic-buying of certain goods - notably petroleum - in anticipation of significant disruption, or price rises, immediately ahead of and on "Brexit Day," could prompt short-term shortages.

 

Impact to Security

The security environment in the UK will not face a marked short-term deterioration in the event of a no-deal Brexit, and the Country Security Assessment Rating (CSAR), will likely remain 2 (Low) in all conceivable medium-term scenarios. Nevertheless, large-scale pro-EU demonstrations in British cities could prompt sporadic disruption and isolated incidents of violent unrest, particularly if met with counterdemonstrations; however, such protests are extremely unlikely to develop into a significant structural threat to the UK establishment. Disruptive industrial action is also possible at international entry and exit points on both sides of the English Channel, including air and sea ports, and customs facilities, as unions denounce any additional workload or lack of resources, or attempt to exploit the predicament to leverage government concessions.

Economic Outlook

A no-deal scenario will almost certainly cause long-term economic damage. Without a deal, the UK will need to rapidly transition to a new, likely more burdensome, trading relationship with the EU, which represents approximately 49 percent of the UK's trade and 44 percent of its exports. Additional barriers to trade, as well as the likely significant hit to investor confidence in the UK's significant service sector, will likely lead to large-scale job losses over the next 9-12 months, including a recession. Economic hardship typically corresponds with increases in criminal incidents and civil unrest. Decreases in government revenues could prompt austerity measures, generating industrial unrest and anti-government protests. Decreased police budgets could limit authorities' ability to prevent and manage security incidents. Increased poverty in Northern Ireland, and any additional or perceived friction along the UK-Irish border could increase Republican terrorism, which could expand into a terrorist attack on the UK mainland. However, the likelihood of a Republican terrorist campaign reaching the intensity of those pre-1998 is very low.

 

Conclusion

The UK - as with other non-EU countries - will likely continue to collaborate effectively with EU and other international institutions over security issues and to combat issues such as human trafficking, smuggling, and international fraud. However, the UK's non-participation in international security intelligence databases following a no-deal Brexit could leave the country more exposed to threats from organized crime and terrorism.

 

Advice

If the UK departs the EU without a withdrawal agreement allowing for a transitional period, heed the following advice:

  • Avoid all demonstrations to mitigate related disruptions and as a routine security precaution; leave the area immediately at the first sign of a confrontation.
  • Anticipate potential short-notice travel disruptions between the UK and EU on and around Brexit Day. Confirm transport schedules before setting out and build flexibility into itineraries.
  • Allow additional time for customs and security procedures if traveling between the UK and the EU on and around Brexit Day.
  • If traveling between the EU and the UK (not Ireland), ensure you have at least six months' validity remaining on your passport from your date of arrival.
  • If a UK or EU citizen, check compliance with the relevant passport authority before traveling between the UK and the EU (not Ireland).
  • If a UK or EU expatriate, check post-Brexit residency status and requirements with the host country authorities.
  • It is possible that UK driving licenses will not be recognized in the EU in the short term; acquire an International Driver's Permit (IDP).
  • UK-registered vehicles driving in the European Economic Area (EEA) after a no-deal Brexit will require an international certificate of insurance from the relevant provider.

 

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