"Nobody will go hungry" in the event of a no-deal Brexit, Taoiseach Leo Varadkar assured us during the week, even if those relying on supermarket ready-meals might have to tighten their belts. This is where Brexit has left us – with the Taoiseach cautioning about the availability of the chicken pesto bake, but assuring us that as a nation of food producers we will be grand. It's not his fault of course – Brexit, like the ready meals, is made in Britain – but there is a message here to the Irish public that a no-deal exit will not be pretty.
This is a tricky one for the Government. The temptation for politicians is always to say that they have things in hand and sure it will all be grand. But this risks a backlash from voters if the worst happens and there is disruption and job losses. “ You told us it would be all right,” they will say.
So as well as trumpeting their no-deal preparations, the Government also has to start preparing us, because there will be a lot of things outside its control if a no-deal happens, it will be costly and many of the consequences are unpredictable.
For example,if a large part of the exports of the Irish beef industry to the UK are priced out of the market overnight, this will lead to job losses and a hit to farm incomes, no matter what the Government does. If there is chaos at Holyhead and supplies to Ireland are delayed – of supermarket goods, generic drugs or whatever – then you can try to ensure we have enough stock here. But nobody really has any idea how long such delays might last, or how bad they might be.
You can’t fully prepare in the face of such uncertainty, or plug it into an economic model and try to work out the consequences. You can have a stab at looking at the impact on exporters to the UK of tariffs and customs and regulatory procedures – and a number of studies have done this. And you can look at the impact on consumers here of the likely hike in prices of goods coming from the UK – up to €1,360 a year, according to an ESRI analysis.
But there are a lot of known unknowns, too, to use the Donald Rumsfeld phrase – things we fear will happen, like delays at ports, or a further fall in sterling, but are impossible to estimate with any accuracy. And there are likely to be a few unknown unknowns too – things nobody has anticipated.
So, yes, there would be disruption from a no-deal exit. Take the supermarket sector, where big international suppliers do not, generally, hold large stocks in Ireland, but serve Irish supermarket chains from their UK bases, with trucks ferrying back and forward across the Irish Sea. We are talking here, about a lot of food products – cereals, biscuits, vegetables, some meats and other items like detergents, toothpaste, toiletries and so on.
The industry here and the big suppliers are talking and planning but they face the same uncertainties as the rest of us. Will they have to deal with tariffs? How will they deal with customs checks on goods crossing the Irish Sea, particularly as lorries would typically contain a whole range of items? How much will prices have to rise?
Problem
All of this had led many to argue that a no-deal exit simply cannot, and will not, be allowed to happen. But the problem is finding a way to avoid it. As things stand, unless Theresa May can get approval for the withdrawal agreement in the House of Commons, or the Article 50 period is extended at the UK's request, then we are, indeed, heading for a no deal. It is the default option.
The UK has given notice that it will leave on March 29th and unless something changes that is exactly what will happen. If the UK parliament finds a way to approve the withdrawal agreement, then the exit will be managed and will start with a transition period during which not much will change until at least the end of 2020.
Right now, such approval looks unlikely, but in the period of pure chaos into which UK politics is now heading, who knows what might happen. And the fact that German chancellor Angela Merkel rang the Taoiseach this week and they spoke for 40 minutes suggests that there may be a move on to try to help Theresa May in some way.
If the agreement is not signed, then the only way to avoid a no-deal exit is for the UK to ask for an extension of the Article 50 period and all 27 EU states to agree. The EU side would be likely to need some reason – a UK general election, for example, or a second referendum.
Is there an option C – a way to avoid the chaos of a no-deal Brexit if the withdrawal agreement is not signed and there is no delay to Article 50? The EU says no. Beyond a few measures to allow planes to continue flying and the financial markets to keep operating, it says it is not considering any other way to ease the UK’s no-deal exit path.
Many in business feel that, such will be the noise in the next few months, both sides would find some way to avoid a no-deal exit. It simply can’t be done, they say, with all the trading and regulatory rules changed overnight. But so far all the legal and political experts have failed to find another way forward. Perhaps it does not exist. Better to stock the freezer with the ready meals, or get ready to start peeling the spuds and boiling the carrots.
