UK out of the EU, “no ifs or buts”

The Guardian reveals that the Office for Budget Responsibility estimated that the recession that may follow a No-Deal is caused by the impact of increased uncertainty and falling confidence on investment and trade.

It goes on to warn that the effect would be as bad as that suffered in the 1990s but only a third as bad as the slump at the time of the financial crisis of the late 2000s. Asset prices would also take a hit, with the watchdog pencilling in a 5% fall in share prices in the final three months of this year, a near-10% drop in property prices between the start of 2019 and mid-2021, a 20% fall in residential property transactions by the end of 2020 and an increase in annual public borrowing and the national debt.

For a start, the close links of our financial services trade with the UK may be severed due to loss of passporting rights of UK entities – that  allow them to operate seamlessly in the Single market. Obviously, if as predicted a recession may follow the period post a no-deal economy then expect an adverse decrease in the influx of British tourists (currently about 40%) visiting us.

This is predictable and can be partly attributed to the sterling weakness which makes Malta holidays less attractive. So far, there has been no preparations or advice from MTA to cater for this eventuality (other than a brave announcement that they negotiated a release of ten percent of sandy beaches to bathers which previously was totally usurped in the hands of beach concessionaires).

Party apologists may argue that nobody knows which way the cookie will crumble, calm down and let’s wait for the final negotiations and hope for the best. On the contrary in the UK, a solid campaign is in progress to inform companies to prepare for new tariff changes with mainland Europe or custom checks on the Irish border.

Common sense prevailed where UK truckers are concerned. They have been granted temporary haulage rights to ensure basic connectivity to minimise disruption resulting from endless queues at ports such as Calais but airlines still need to meet Brussels regulations that in the end mean that these have to be registered and owned by EU nationals.

Not surprisingly, Ryanair had recently signed up with Malta government to register its Malta Air subsidiary and transfer 200 employees on the Malta payroll in anticipation of such regulations. We are all aware that the UK has only a short period up to 31st October to decide whether to accept the deal or exit without one. If leaving without a deal, the UK would cancel all ties with the EU immediately, with no transition period and no guarantees on citizens’ rights of residence.

With all the events currently happening, a no-deal Brexit is likely and this is the worst scenario for the United Kingdom. Prime Minister Boris Johnson said he wants a deal but has refused the talks until the EU changed what he called the “undemocratic backstop” - the mechanism to prevent a hard border on the island of Ireland that could keep the UK in a customs union.

The border is a matter of great political, security and diplomatic sensitivity in Ireland. Since the signing of the Good Friday agreement almost 20 years ago it was agreed that there should be no physical checks or infrastructure at the Belfast frontier.

That’s where the backstop comes in, as a last resort, to maintain a seamless border on the island of Ireland.

This has been interpreted by Eurosceptics in the Tory party as a yoke meant to retain a close relationship with the European Union for an indefinite period. This will be in force if parties would not agree to a final deal at the end of a standstill transition period, but not if the UK leaves in October without a deal. The EU, on the other hand, is not optimistic about any agreement.

They are probably not going to back off the backstop, because it is an integral part of any withdrawal agreement and it is there to stay.
Back to the legal area, the UK would immediately leave the European Court of Justice and Europol. For UK motorists, a no-deal would mean special driving licenses to drive in EU, the return of mobile phone roaming charges, European Health Insurance Cards would be invalid and food prices could rise.

When needing to stay abroad longer than 90 days, or to work or study, you may also need a visa or permit. For UK students studying in the EU and EU students studying in the UK, there is going to be a period of uncertainty.

The devaluation of the pound will certainly impact negatively the cost of living. Some argue that a practical solution to the impasse would be an early election.

One option is that the Prime Minister would call an early poll to win more seats for the Conservatives.

At the moment the Tory party has a majority of just one seat in Parliament. MPs could try to force an election when parliament resumes on the 3rd of September through a vote of no confidence. For this option to succeed, a majority of MPs need to vote for it and that includes some of the Conservatives to vote against their own government.

The Prime Minister could try to delay things, so the election will not happen before Brexit day. Government is to set aside £2.1bn for preparations on Brexit. The aim of the cash injection is to enhance the processing of passport applications and increase training for customs staff.

They will also add 500 border officials to the 500 already promised this year. Some of the money will go to ensuring the continuity of vital medicines and medical products. Around £140m is allocated to a public awareness campaign to help and support Brits living abroad, including Northern Ireland.

Is there any logic in such a lose-lose scenario apart from pure nationalism?

The Labour party claims that such allocations are an “appalling waste of tax-payer cash” at a time when the economy is fragile and weak. John McDonnell, the shadow chancellor, even said that the government could eliminate a no-deal and rather spend these billions on hospitals, school and in the end, people.

Why did the UK end up in such a mess? Can further talks between the parties be furtively carried out before the die is cast?

Many politicians are against a no-deal and of course, 48% of the British electorate voted to stay. What boosts the fear of no-deal Brexit is that the Prime Minister in his gung-ho style has pledged to leave the EU by the deadline, with or without the deal.

As a damage limitation tactic, he is guaranteeing vast sums to prepare the country for the Armageddon pill. There are still a few months left until Halloween and sadly Malta has been a laggard in its preparation for the eventual business disruption.

It is ironic that during the silly season, reporters are more focused on the’ Invictus’ tattoo delectably revealed on our prime minister biceps rather than the dark clouds looming over the horizon.