Britons face higher prices when buying from the European Union unless the government can secure a Brexit deal, while retirees in countries like Spain risk losing access to pensions paid into U.K. banks.
That’s according to 25 technical notes released Thursday by Brexit Secretary Dominic Raab setting out how businesses and citizens should prepare for the possibility of talks with the bloc collapsing. He was grilled about how companies would be burdened with more red tape and how costs for consumers would rise, including on credit card payments. The financial fate of elderly Brits settled in cheaper, warmer countries in the EU came up repeatedly.
“It’s hardly in the interests of southern Spain to do harm to the U.K. pensioners out there,” Raab told reporters. “And what you’d expect is to see, even in the unlikely outcome of a no deal, is actually cooler heads prevailing.”
The publication of the planning for a worst-case scenario has been the subject of political debate in recent weeks. Brexit-backers had urged Theresa May’s government to do so, to show the EU it was prepared to walk away from talks and immediately get to work on new trade deals around the world.
But following reports that plans would involve closing motorways to deal with queues of trucks, and stockpiling drugs, Conservative lawmakers then accused May of trying to scare voters.
‘Grasp Opportunities’
In a speech, Raab said the U.K. still expects to strike a “strong deal that benefits both sides” but that the government “must be ready” in the event that negotiations fail. The aim is to “both to manage down the risks, but also to grasp the opportunities that Brexit will present,” he said.
The papers reflect the government’s overall approach that as far as possible, nothing should change immediately when Britain leaves the EU in March 2019.
Financial services drew the biggest scrutiny given how tightly integrated the U.K. is into the EU’s structure. The nine-page banking document warns that British companies will lose access to European payments infrastructure such as TARGET2 and the Single Euro Payments Area.
Customers “could face increased costs and slower processing times for Euro transactions,” the paper says. “The cost of card payments between the U.K. and EU will likely increase.”
That’s because an EU rule preventing surcharges on transactions would no longer apply. Meanwhile people in Europe who rely on U.K. banking services “may lose the ability to access lending and deposit services, insurance contracts.”
At an institutional level, U.K. investment banks will have more difficulty selling services into the EU. The government concedes it won’t be able to guarantee the derivatives contracts will still operate between EU and U.K. forms. U.K. exchanges may not be able to list EU companies.
Other businesses that trade with the EU are urged to “take account of the volume of their trade.” Goods coming in and leaving would need customs declarations and importers would need to register. These extra series of steps will inevitably raise prices for British consumers.
Health Secretary Matt Hancock said in a letter the government would ensure the U.K. maintained a six-week supply of drugs in case imports from the EU are affected by a no-deal Brexit, but that hospitals “do not need to take any steps to stockpile additional medicines.”
Talks between the EU and the U.K. have been at a virtual impasse for weeks, though both sides committed this week to stepping up efforts to prevent any agreement slipping too much beyond the original deadline of October — meant to allow enough time for lawmakers to ratify it before the U.K. leaves.
But with times so short, markets have fixated on when a breakthrough might happen. David Lidington, May’s deputy, said a deal could slip to the end of the year, Herald Scotland reported on its website Thursday.