BREXIT IS DELAYED
PM and Brussels agree to postpone exit date until May 22 if Commons votes for her deal – or April 12 if it fails
BREXIT will be delayed until at least next month after a late-night deal in Brussels. European Union leaders rejected Theresa May’s appeal for an extension until June 30 after hours of fraught negotiations.
They agreed to extend Article 50 until May 22 – if the Prime Minister gets her deal through Parliament next week.
But they warned her that if the deal was not passed she must make a decision by April 12 – just three weeks’ time – on what to do next.
At that point, she will have to decide whether to leave with No Deal or seek a longer delay, probably until at least the end of the year, which will require the UK to take part in the European Parliament elections on May 23.
It came after ministers said she was prepared to take Britain out of the EU without a deal if her agreement is not passed in the Commons next week.
The PM last appeared to express regret for her controversial remarks earlier this week which blamed MPs for failing to agree on a deal. In a late-night press conference in Brussels, she said Britain was now at a ‘moment
of decision’. She added: ‘I know MPs on all sides of the debate have passionate views and I respect those different positions.
‘[On Wednesday night] I expressed my frustrations and I know that MPs are frustrated too - they have difficult jobs to do.
‘I hope we can all agree that we are now at the moment of decision and I will make every effort to make sure we can leave with a deal and move our country forward.’
Last night’s announcement removed the prospect of a No Deal Brexit a week today.
After seven hours of talks, EU leaders last night agreed a fudge, that will effectively put back the possibility of a No Deal Brexit by a fortnight to April 12. The proposal means that if MPs back Mrs May’s deal then Britain’s departure will be delayed until May 22 to allow time for the necessary legislation to pass.
If the deal is not passed then Mrs May has until April 12 to inform the EU of her next steps.
But she added that last night’s plan
‘Regret for speech blaming MPs’ ‘Labour won’t support it’
outlined the ‘importance of the House of Commons passing the Brexit deal next week so we can put an end to the uncertainty’.
Mrs May said: ‘I welcome the Council’s approval of the legally-binding assurances in relation to the Northern Ireland backstop, which I negotiated with President Juncker last week.
‘This should give extra assurance to Parliament that in the unlikely event that the backstop is ever used it will only be temporary and that the UK and EU will begin work immediately to replace the backstop with alternative arrangements by the end of December 2020.’
European Council president Donald Tusk said the response to Britain’s request for an extension to the Article 50 withdrawal process was agreed ‘ unanimously’ by EU leaders.
‘In regards to the extension our decision envisaged two scenarios,’ he said.
‘In the first scenario, that is if the agreement is passed next week, the European Council agrees an extension to May 22.
‘In the second scenario, if the agreement is not approved, the European Council agrees an extension until April 12 while expecting the UK to indicate a way forward.
‘What this means in practice is that until that date all options remain open.’ Last night’s extension announcement came after three senior ministers said they believe that if Mrs May’s deal is rejected by MPs again, she would rather sanction a No Deal Brexit than plunge the country into the limbo of a lengthy delay.
Extraordinary details also began to emerge of the Government’s plan to ramp up No Deal preparations.
The military yesterday installed a team in a nuclear bunker under the Ministry of Defence to co- ordinate the Army’s response if the UK leaves the EU without a deal.
However, it was also claimed 18 Remainer ministers are threatening to quit in a plot to snatch control of Brexit and avoid No Deal.
They want votes on alternatives to Mrs May’s deal, including a longer delay, or even reversing the exit process. Ministers had told the Mail they expected Mrs May to take Britain out of the EU without a deal if her plan was voted down for a third time.
One said: ‘If the deal is not going to be deliverable because Labour won’t support it – and that is where we are right now – then the new reality is going to be making No Deal work.’
Another senior minister said Mrs May had been driven to a No Deal position in part by the actions of Cabinet Remainers like Amber Rudd, Greg Clark and David Gauke who provoked uproar in the party when they tried to force her to take the option off the table.
‘If the meaningful vote is defeated again then it will be No Deal,’ the minister said.
ON THE day after the 2016 EU referendum, the pound went into freefall on foreign exchange markets, credit became much scarcer and Britain looked to be without a functioning government as David Cameron threw in the towel.
Into the breach stepped the Bank of England Governor to steady the nation’s nerves. Outlining a contingency plan for tackling an economic and political vacuum, he endeavoured to calm investors, saying: ‘We are well-prepared for this.’
The interest rate was slashed so that lending would continue and the Bank printed an extra £60 billion to underpin the economy.
This emergency package was hugely successful. Despite widespread fears about the ramifications of the Leave vote, confidence in the nation’s economic stability was restored.
Indeed, Britain has performed remarkably well since then, with employment at record levels, output chugging along nicely and public finances dramatically improving, despite months of political uncertainty.
Unpredictability
What we have seen has been a much more positive outcome than most forecasters, including the Bank and the Washingtonbased International Monetary Fund (IMF), predicted.
The intervention by The Old Lady of Threadneedle Street demonstrated the huge value of contingency planning when faced with the possibility of an economic and political journey into the unknown.
So it ought to be reassuring that, as Britain lurches towards another period of unpredictability with the distinct possibility of a No Deal exit, public officials have yet more well-prepared emergency plans: Project Kingfisher and Operation Yellowhammer.
In much the same way as weather forecasters use human names to describe storms, so the Treasury — home over the years to several bird-watching Chancellors — has given avian names to its initiatives.
For my part, I regard the scare stories of sweet shops without Mars bars, supermarkets with no supplies of toilet paper and pharmacies running short of medicines as overdone. Even if supply chains are interrupted, I have faith in Britain’s bosses to overcome the bottlenecks within days, if not hours.
But everyone — even the most rose-tinted Brexiteers — recognises that seceding from an economic relationship with the world’s largest trading bloc and one that has fuelled prosperity for more than four decades will inevitably be disruptive to supplies and the stability of financial markets.
Operation Yellowhammer, the Civil Service’s worst- case Brexit planning unit, would seek to intervene directly to ensure that the flow of fresh foods, drugs and medical equipment is not interrupted.
Project Kingfisher aims to guarantee that economic output does not stall by using the nation’s strong balance sheet to pump funds into the most stressed parts of the economy.
This would be in the form of new money beyond that which Chancellor Philip Hammond has already been dishing out to Government departments in preparation for Brexit.
It is known that Bank of England Governor Mark Carney regards a No Deal Brexit as a bigger threat to supply chains and business confidence than to events in the financial markets.
But the Bank still has in place contingency plans, including possible cuts to interest rates. It has also stress-tested the banks in case there is a big fall in property values.
Meanwhile, the Government is ready to launch Yellowhammer — a ‘command and control’ system employing 5,000 people to prevent a run on food, fuel and, potentially, the banking system.
Underlining the urgency and seriousness of the preparations for No Deal is the decision to activate a team in a nuclear bunker beneath the Ministry of Defence to manage operations.
They are right to be prepared. For civil servants still have nightmares about the fuel tanker drivers’ strike of 2012, when factories were almost brought to a standstill overnight and panic-buying of fuel by motorists led to stations running out of supplies.
Yellowhammer would link major Government departments dealing with any civic contingencies. As has been the case during past emergencies, such as the outbreak of foot and mouth disease in 2001, the Ministry of Defence is ready to offer 3,500 troops for civilian duties.
A subset of Yellowhammer is Operation Fennel — an emergency traffic plan for Kent, should delays at Dover and Folkestone create tailbacks. Concrete barriers have been positioned along Kent’s main transport artery amid reports that up to 10,000 lorries could be queuing across the county.
On a wider level, Mr Hammond’s Spring Statement last week showed that, as a result of the remarkable improvement in public finances, the Treasury potentially has as much as £26 billion to pump into public services. Indeed, if no deal with Brussels could be achieved, the Government could also start to reallocate the £39 billion exit bill due to be paid to the EU over a number of years.
Resources
The officials working on Kingfisher would try to make sure harder-pressed parts of the UK had sufficient resources and that small businesses, the backbone of our economy, had access to special support schemes, should trade slump.
This is not just a domestic project. Brexit’s potential impact on the economy has been modelled by several international organisations. The IMF has found that, under an EU exit deal similar to the one twice voted down by MPs, the long-term loss of output would be limited to 2.5 per cent to 4 per cent over a decade.
It predicts that a No Deal Brexit could cost between 5 and 8 per cent over the same period — alarmingly, double the potential harm.
Nevertheless, the Bank of England has been confident enough to raise its economic forecasts on the basis of recent good statistics and expects a strong pick-up in investment if Brexit uncertainty is removed.
Spirit
Indeed, Mr Carney told the Mail earlier this month that he ‘has our back’ and is ready to step in if there is disruption.
Of course, there are still doom- mongers. A most unusual joint letter from the general secretaries of business organisation, the CBI, and the trades union federation, the TUC, has warned ‘our country is facing an emergency’ and that firms and communities are unprepared for No Deal.
However, this chilling warning is not shared across the whole business community.
Lord Wolfson, the Brexiteer boss of Next, says he’s seen no evidence Brexit uncertainty is affecting consumer behaviour.
Grocery bosses are less sanguine and warn of dire consequences, not least the soaring cost of food basics from butter to oranges.
However, a chairman of two FTSE 100 companies told me yesterday that what he considers to be a ‘confected panic’ reminded him of fears that the Millennium Bug would cripple computers as the clock struck midnight on January 1, 2000.
What can be said for sure is that no one knows what will happen if there is a No Deal exit. But we can be sure that it would have a convulsive economic shock.
We have in place the planning, fiscal and monetary resources and, above all, an immutable national spirit to deal with whatever is thrown at us.
Yet it could still be disorderly and painful, which is why I believe, even at this 11th hour, Mrs May’s deal still offers Britain the best opportunity to preserve jobs and prosperity.