No deal options set out as government fires gun on Brexit

Catherine Neilan
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Theresa May Makes Commons Statement On Brexit
The papers were published as Theresa May updated MPs on progress made since her Florence speech (Source: Getty)

The government has given the clearest indication yet of how a "no deal" scenario would affect Britain after leaving the EU, with the publication today of two white papers. 

The papers, which relate to customs and trade, build on the government's previous position papers but lay the foundation for legislation required after Brexit. And while Number 10 has repeatedly said it is planning for all contingencies, this is the first time it has put forward details of what that might entail. 

Read more: Theresa May: The ball is in EU's court - and we will prove Brexit doomsayers wrong

The Customs Bill white paper repeats the UK government’s commitment to avoid any physical border infrastructure on either side of the border between Northern Ireland and Ireland.

It also sets out how goods will be classified for duty, set and vary the rates of customs duty and any quotas; amend the VAT and excise regimes so that they can function effectively post-exit; set out the rules governing how HMRC will collect and enforce the taxes and duties owed; and implement tax-related elements of the UK’s future trade policy.

The trade white paper meanwhile sets out plans to enable the UK to "maintain the benefits" of the World Trade Organisation’s Government Procurement Agreement. It also paves the way to bring across into UK law existing trade agreements between EU and non-EU countries and creates a new "UK trade remedies investigating authority".

British Chambers of Commerce's head of trade policy Anastassia Beliakova said this contingency planning was "helpful" but stressed that just two per cent of businesses viewed the no deal option favourably.

"Businesses cannot afford to face excessive delays or administration for new customs checks, and we urge the UK and the EU to reach an agreement that minimises burdens as much as possible," she said.

The papers were published as May updated MPs on progress made since her Florence speech last month. She insisted the ball was in the EU's court, but that she was confident a deal could be struck that would prove "the doomsayers wrong".

Read more: Theresa May to consult business leaders over Brexit plans today

Of the no deal scenario, May said: "While I believe it is profoundly in all our interests for the negotiations to succeed, it is also our responsibility as a government to prepare for every eventuality, so that is exactly what we are doing. These white papers also support that work, including setting out steps to minimise disruption for businesses and travellers."

This is unlikely to go down well in Brussels, where the fifth round of negotiations are currently underway. But it may help appease the Brexiteers who were left disgruntled by her admission that the European Court of Justice (ECJ) will have jurisdiction over the UK during a transition period - which May said was essential for businesses on both sides of the channel. 

As a result of what she calls "an implementation period", May said the ECJ would still govern rules "for part of that period".

She stressed it was "highly unlikely" that any new laws would be brought in that hadn't already been discussed "and on which we would have been able to say whether they would be a rule that we would sign up to, or a rule that we would not wish to sign up to".

However, she did not rule out the possibility that it might happen - something whic Boris Johnson - among others - has said must absolutely not happen, identifying it as one of his four "red lines" during a recent interview.

Arch Leaver Jacob Rees-Mogg, who has been unwavering in his support of the Prime Minister, told City A.M. he was not pleased with this concession. "If the ECJ still has jurisdiction we will not have left the EU. It is perhaps the most important red line in ensuring the leave vote is honoured," he said.

But the foreign secretary - who has been on thin ice since his "dead bodies" comment - has put a statement describing her speech as "great", echoing her view that the chances of new rules coming in were "very small".

He added: "Yes, we will have to mostly operate under existing rules during the transition but we will be able to negotiate proper free trade deals and business will be able to prepare properly for Brexit.

"What matters is the end state and our freedom to do things differently and better - and once again the PM sets out a powerful vision: out of the customs union, out of the single market, taking back full control... the future is bright. Let's keep calm and carry on leaving the EU."

Former justice minister and fellow Brexiteer Michael Gove also urged Leavers to rally behind May, tweeting: "Strong statement from PM on Brexit - let's be pragmatic over implementation to secure maximum freedom to diverge from EU in end state."

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