14 February 2019

Financial Times: EU businesses urge clean break from UK or long Brexit delay

Big manufacturers in Europe have urged Brussels to either make a clean break from Britain on March 29 or delay Brexit by six to 12 months, warning that a short delay would undermine their contingency plans.

EU diplomats and officials said the stark advice, notably from the automotive and logistics sectors, is a factor bolstering the case for a longer extension if the UK asked to delay its exit date.

While businesses would prefer an exit agreement by the end of March, European governments and businesses are increasingly pessimistic about Theresa May’s chances of securing a House of Commons majority for her Brexit deal.

Some senior officials in Paris and Brussels support moving the departure to at least the end of 2019, arguing that just a few months’ delay would be pointless if Westminster remained deadlocked.

“We will not go for serial extensions,” said one senior EU official involved in Brexit. “There is strong resistance to that among the 27.” That tallied with reports of Olly Robbins, Britain’s main Brexit negotiator, being overheard saying that MPs would ultimately face a choice between the prime minister’s deal or a long delay to quitting the EU.

Brussels’ strategy is partly driven by advice from companies whose contingency plans — including scheduled production holidays, stockpiling and warehousing plans — were built around a no-deal exit on March 29.

One carmaker said they had made it clear to EU officials that a no-deal exit in June, or a series of short delays before a hard break, would be “the worst worst-case scenario”. “That would be devastating for us. We cannot change our planning in such a short period of time,” the representative said.

Another carmaker told the Financial Times that it would be impossible to re-engineer no-deal contingency plans if a delay lasted for less than six months. “It becomes more disruptive than a no-deal in March,” said the company official. “All the investment is wasted.”

The message has principally been passed to EU institutions and member states by individual companies rather than trade bodies, in part because of competing interests within sectors. Groups who have invested heavily in no-deal preparation see it as potential advantage over rivals who bet against a disorderly exit in March.

“Business is now saying it is better to get it over with,” said one senior EU figure. “Companies are saying, ‘you must be crazy, we’ve now built our contingency plan on March 29, you can’t change that at short notice. If you change that you can change it only once and give us advanced notice’,” the diplomat said. “That is where the idea comes to extend to the end of the year.” [...]

Full article on Financial Times (subscription required)

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