British government to activate full 'no-deal' Brexit preparations

LONDON (Reuters) - The British government said on Tuesday it would implement plans for a no-deal Brexit in full and begin telling businesses and citizens to prepare for the risk of leaving the European Union without an agreement.

With just over 100 days until Britain is due to leave the EU, Prime Minister Theresa May is yet to win the support of a deeply divided parliament for the deal she struck last month with Brussels to maintain close ties with the bloc.

She has said a delayed vote on her deal will take place in mid-January, prompting some lawmakers to accuse her of trying to force parliament into backing her by running down the clock as the March 29 exit day approaches.

May, who last week survived a confidence vote in her Conservative Party, has warned lawmakers that the alternatives to her deal are leaving without an agreement or no Brexit.

Her spokesman said while the government's priority remained leaving with a deal - which was the most likely scenario - it would now implement its no-deal plans "in full".

"Cabinet agreed ... we have now reached the point where we need to ramp up these preparations. This means we will now set in motion the remaining elements of our no deal plans," he said.

"Cabinet also agreed to recommend businesses now also ensure they are similarly prepared, enacting their own no-deal plans as they judge necessary. Citizens should also prepare," he added, saying that after no-deal guidance issued earlier this year, further detailed advice would be published soon.

The spokesman said plans included setting aside space on ferries in order to ensure a regular flow of medical supplies.

Defense minister Gavin Williamson told parliament that 3,500 armed forces personnel would also be held ready to support the government with its no-deal contingency plans.

Vince Cable, leader of the pro-EU Liberal Democrats, said the government was "attempting to scare MPs, businesses and the public with the threat of a no-deal".

Earlier this month, finance minister Philip Hammond said he had made more than 4.2 billion pounds ($5.3 billion) available for Brexit planning since the 2016 referendum and would be allocating a further 2 billion pounds of that to government departments.

Britain's economy has slowed since the 2016 Brexit vote and there is no guarantee that businesses and consumers will retain tariff-free access to EU goods after leaving the bloc.

(On the way to Brexit: https://tmsnrt.rs/2QMkbnu)

(Britain's trade ties: https://tmsnrt.rs/2D0E8zS)

CONSEQUENCES

The British Chambers of Commerce forecast on Tuesday that economic growth this year and in 2019 looks set to be the weakest since Britain emerged from recession in 2009, due to a freeze in business investment and weak consumer demand ahead of Brexit.

Parliament is at an impasse over Brexit, with factions pressing for different options for future ties, leaving without a deal or remaining in the EU.

May is seeking assurances from the EU over the so-called Northern Irish "backstop" - an insurance policy to prevent the return of a hard border between the British province and EU-member Ireland that its critics fear will trap Britain in a customs union with the EU indefinitely.

With the EU unlikely to offer concessions that would win over lawmakers and May repeatedly ruling out a second referendum, the risk of a no-deal has increased, a scenario that would mean an abrupt exit that some businesses fear would be catastrophic for the world's fifth largest economy.

Housing Minister James Brokenshire told BBC Radio the government was making no-deal preparations "reluctantly."

"It's not what we want to do, it's not what we still expect to do because we want to see the deal secured, the vote through parliament, but I think it is right and proper that we maintain our work on preparing for a no-deal," he said. "There will clearly be consequences of a no-deal in the short term."

Mike Amey, head of sterling portfolios at fund management giant PIMCO, said there was "low probability" of no-deal as there was not a majority of lawmakers who would accept it.

Britain would be more likely to extend or revoke its Article 50 notice to leave the EU, he said. May has so far ruled out doing either.

(Additional reporting by Michael Holden, Writing by Kylie MacLellan, Editing by Janet Lawrence)

12/18/2018 10:28

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