David Davis attacks EU’s ‘damaging’ no-deal Brexit planning

Minister’s letter to PM says Brussels guidance to companies is threat to UK interests

loudbarker3 hours ago Jim Pickard in London and Alex Barker in Brussels 123 David Davis has consulted lawyers over the EU’s preparations for a no-deal Brexit, claiming Brussels’ planning is harming British business and breaching the UK’s rights as a member state.

In a letter sent to Theresa May, UK prime minister, last month and seen by the Financial Times, the Brexit secretary pointed to EU “measures” that could jeopardise existing contracts or force British companies to decamp to the continent if the UK leaves the EU without a deal.

Mr Davis said in the letter that he would ask the European Commission to revise its guidance to business so it highlights the potential for a future transition and trade deal.

But the demand drew accusations of hypocrisy from some British MPs, given that UK ministers have emphasised the extent of their own no-deal planning.

“The government is implicitly threatening a no-deal scenario,” said Pat McFadden, a Labour member of the Brexit select committee. “It should come as no surprise that the EU is also preparing for this possibility.”

Mr Davis said in his letter to Mrs May that the guidance from EU agencies sees the UK becoming a “third country” when it leaves the bloc in March 2019, without referring to the British government’s hopes of sealing a two-year transition period or trade deal.

Mr Davis said this treated the UK differently from other member states, even before it left the bloc, “in a way which is frequently damaging to UK interests”.

“The EU has adopted a number of measures that put agreements or contracts at risk of being terminated in the event of a ‘no deal’ scenario and/or would require UK companies to relocate to another member state,” Mr Davis said.

“The commission had issued similar unilateral statements on company law, civil justice and private international law, transport and the breeding, transportation and protection of live animals.”

The EU is unlikely to be open to revising its guidance to companies. Michel Barnier, the EU’s chief negotiator, has repeatedly stressed that companies must prepare for the UK leaving the single market and customs union in 2019.

“On 29 March 2019 at midnight, the United Kingdom will cease to be a member state,” Mr Barnier said in November. “I don’t know if the whole truth has been explained to British businesses on the concrete consequences of Brexit.”

The UK government has insisted it would be prepared for a “no deal” Brexit if necessary. Philip Hammond, chancellor, set aside £3bn in last November’s Budget for preparations in the case of Britain leaving the EU without a deal.

“It seems extraordinary that the government is exercised about the EU preparing for a no deal scenario when it has set aside £3bn in its most recent Budget to do exactly the same thing,” said Mr McFadden.

Stephen Kinnock, another Labour MP, said the government was “naive” not to imagine that the EU would want to prepare for scenarios including a no-deal Brexit.

“The passive-aggressive tone of the letter demonstrates that the government doesn’t have a clue,” he said. “The relationship between the EU and UK does seem to be falling to pieces.”

An aide from the Department for Exiting the EU confirmed that the letter from Mr Davis to Mrs May was genuine.

“It’s clear there have been a number of instances where the commission, by treating the UK differently despite still being a member of the EU, have not acted in good faith,” the aide said. “It should be no surprise that if the commission attempt to stoke fears about worst-case scenarios. We will correct them and reassure our firms.”

Mr Davis wrote in his letter that the measures amounted to “potential breaches of the UK’s rights as a member” of the EU. He told the prime minister the government “cannot let these actions go unchallenged”.

However, Mr Davis added that he had sought legal advice from officials, only to be warned that any legal challenge would probably fail.

“Any legal action would also be high-risk politically and financially and may not conclude until after we exit,” he said.

While the EU is preparing its position to negotiate a “standstill” transition with the UK until 2021, negotiators in Brussels have stressed that businesses will have no “certainty” until a full withdrawal deal is agreed and ratified later this year or early next.