United Kingdom / European Union: the likelihood of a hard Brexit or no-deal Brexit increases…. How is France preparing for this?

19/10/18

French version

At the European Council of 18 October 2018 in Brussels only 5 months ahead of Brexit day, the EU leaders reviewed the state of negotiations with the UK and noted that not enough progress has been achieved. What are the implications of this and what have the French government and businesses been doing?

Increased risks

After the meeting of the Heads of States and Governments on 17 October, official sources said that one did not perceive anything new on the two negotiation sides.

Worse, the heads of States and Governments have reportedly abandoned their plans for another summit on 17 and 18 November, which was viewed the last chance to strike a deal, given the political and legislative process required for the conclusion of an agreement before 29 March 2019.

It already seemed almost inevitable that the UK would leave the EU on 29 March 2019. Most authorized commentators now believe that the chances of a hard Brexit without transition or with minimum agreement have never been so high. Of course, nothing will be certain until the negotiation room will close.

Contingency plans

In the meantime, the UK, the European Commission and the other Member States have started actively preparing for contingency plans.

Ten days ago, the French government released a bill allowing it to take action essentially in relation with the right of entry, stay and employment of UK citizens in France, the checks and controls for sanitary, safety and customs purposes, the development of port, airport and rail facilities and finally the continuity of professional licenses and financing agreements beyond Brexit.

Contrary to what part of the UK press has been writing, the bill does not intend to “cause pain to the UK” but on the contrary to alleviate the potential damages that a hard Brexit would have on people and businesses. The bill also states that the French government will want to ensure reciprocity. Finally, the bill allows the government to implement whatever contingency measures the EU could take.

Businesses have not been waiting for the bill to take action. Besides financial services, which have already investigated the consequences of Brexit and sometimes even prepared for the changes, some sectors have recently started to move, including automotive, aerospace and defense industries.

French large manufacturers have requested Brexit contingency plans from their suppliers. French pharmaceutical companies are said to be transferring market authorizations from the UK to France and / or reorganizing their regulatory functions to ensure conformity if standards are no longer common.

To conclude

Finally, it is also worth noting that the French authorities themselves are adapting to Brexit. Customs have recruited 250 new agents to be operational by March 2019. They have also vowed to increase the portion of trade going through the Authorized Economic Operator regime. They are working on other simplifications and they are providing ad-hoc advice about Brexit. France has also confirmed its tax rate reduction program over the next 3 years and has deeply reformed its labor laws. Last, but not least, the Education system itself is adapting and the government has committed to open large international schools to care for the children of im

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Emmanuel Picq
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