How the UK in addition to EU Are Preparing for Possible Brexit Chaos
the idea was only just a few days ago that will the idea still seemed as though Britain in addition to the European Union might be able to find an agreement that will would likely prevent the UK’s unregulated exit through the EU. nevertheless following Prime Minister Boris Johnson’s speech at the recent Conservative party conference, an address that will was not exactly well received in Brussels, the path toward a deal will be rockier than ever. in addition to Once more, the scenario of a no-deal Brexit seems the most likely outcome, complete with the “chaos” in addition to “catastrophe” that will has been forecast for months.
For the economy, a no-deal Brexit primarily means that will everything would likely become slower in addition to more expensive. Customs duties would likely be imposed, border inspections introduced, supply chains destroyed in addition to ownership stakes devalued.
Many questions remain unanswered when the idea comes to how the pound in addition to stock markets might react on the day Britain crashes out of the EU. How much wealth, how many jobs might be lost? The true impact will be impossible to predict.
the idea will be clear, though, that will Europeans would likely feel the impact of a no-deal Brexit: German customs officers in addition to Irish farmers, auto-industry executives in addition to trade-industry workers, diplomats in addition to bankers. Most fear that will day, nevertheless there are some who wish to profit through the idea.
The Transportation Manager
In Hoek van Holland, one of Rotterdam’s ferry ports, final preparations are under way. Soon, the Stena Hollandica, one of the biggest ferries inside globe, will leave for Harwich, a town on England’s east coast.
A quarter of an hour before departure, the last truck drives across the ramp, completing a load of freighters that will, if lined up end-to-end, would likely stretch for a few-in addition to-a-half kilometers. They are carrying fresh strawberries, tomatoes, lettuce in addition to apples — easily perishable produce that will must reach its destination on time. Every move counts. the idea takes exactly one minute in addition to thirty seconds for a truck to be checked in for the crossing, a masterly feat of logistics.
A no-deal Brexit, though, would likely almost certainly slow things down.
Should the idea come to that will, every load would likely have to be individually declared in addition to inspected, which would likely take between six in addition to 10 minutes per truck, at best, in addition to would likely result in considerable delays in addition to long traffic jams. Or, to put the idea inside more precise syntax of Marcel van der Vlugt, a Stena Line executive: “the idea would likely be a big problem for us in addition to our customers.”
The Brexit Diplomat
Gregor Schusterschitz, 49, will be Austria’s Brexit representative at the EU, in addition to as a result, he has been at work non-stop since he was named to the position in March 2017.
He can still vividly remember his first meeting, when he discussed how the EU should prepare itself for a no-deal Brexit with his counterparts through some other member states. “At first, with everyone expecting that will a deal would likely be reached, nobody took the idea seriously,” he says. “nevertheless we got to work.”
Hundreds of meetings with member-state representatives were held. There were seminars in addition to PowerPoint presentations, in addition to there were working groups looking into the most complicated questions: What customs will apply on November 1 if the UK becomes a third country? How will the duties for companies be calculated? in addition to will British workers who continue to live inside EU still be allowed to vote in local elections?
The European Commission has currently released around 100 informational documents on its website in addition to has initiated 19 laws — focusing on everything through landing rights for airplanes to labels for food products.
Brexit will be a balancing act. On one hand, officials want to protect citizens in addition to companies through the consequences of an unregulated exit as thoroughly as possible. On the some other, the arrangements that will result cannot replace the exit agreement, otherwise further negotiations would likely be unnecessary. Only one thing will be clear, according to the diplomat: “A Brexit without a deal will be the worst imaginable scenario.”
The Auto Manager
To that will day, the Ford Fiesta will be the most beloved car style inside United Kingdom. Many of the engines for the style come through the UK towns of Bridgend in addition to Dagenham, nevertheless the cars are assembled in Cologne. Thousands of them are then exported back to the United Kingdom, Ford’s largest market in Europe.
the idea will be a well-honed delivery symbiosis that will has been optimized in addition to adapted through the years. A no-deal Brexit could destroy the idea, with Ford potentially being forced to pay customs twice: about 4 percent for the import of the engines in addition to then 10 percent for the export of the cars to the United Kingdom. The company would likely find the idea hard to pass the resulting rise in costs on to the consumers, says Gunnar Herrmann, head of Ford Germany. “For us as manufacturers, the idea would likely be fatal if demand inside United Kingdom was to collapse,” he says. “The workload in German factories would likely also be in danger.”
Herrmann’s worst-case scenario envisions a 25 percent plunge in sales numbers on the British Isles, a huge cut through the 400,000 cars currently sold there each year. Such a drop would likely have a profound effect on the job security of Ford’s 18,000 employees in Cologne in addition to the same holds true for workers inside company’s plants in Britain. They could face shortened shifts in addition to job cuts.
some other German carmakers are also dependent on the unimpeded movement of goods across the Channel. They deliver over 650,000 cars to the United Kingdom each year — more than twice as many as they ship to China, the biggest automobile market inside globe. The reason: Unlike in China, where all big-name car brands have large factories, England has not played an important manufacturing role for quite some time. Most of the cars sold inside UK are built outside the country.
For months, car manufacturers have been working on plans to mitigate the direct consequences of an unregulated Brexit. nevertheless they are little more than emergency measures for a transitional period.
BMW, Jaguar Land Rover in addition to Toyota have announced plans to temporarily close their British plants in early November in anticipation of the forced closure that will parts shortages would likely trigger. BMW will be also considering supplying its British plants by cargo plane if necessary, to circumvent freighter truck backups at the border.
Meanwhile, the ongoing uncertainty surrounding Brexit will be causing growing frustration within the companies. In March, carmakers had already made significant preparations for the coming break, nevertheless then Brexit was pushed back. currently, the break will be again approaching, in addition to the idea seems that will simply going through with the idea would likely be better than the constant doubt. “We can’t constantly be setting our contingency plan in motion in addition to then suspending the idea again,” says Herrmann. “the idea’s time for political leaders to make a clear decision.”
The Dairy Farmer
Ruairi Cunningham learned a decade ago that will milk, too, can be a powerful expression of patriotism. One of the dairy farmer’s competitors began to advertise with the claim that will the idea only used milk through the Republic of Ireland — in addition to the sales pitch “Farmed inside Republic of Ireland” became a thing.
“We get our milk through farms in both Northern Ireland in addition to the Republic of Ireland in addition to bring the idea to our plant in Northern Ireland. Back then, the idea was all processed into just one product, packaged in addition to delivered to all of Ireland,” says Cunningham. “nevertheless the supermarkets we supplied asked us to separate the milk regionally, so we modified our facility in addition to can currently separate the Irish milk through the milk produced in Northern Ireland.”
If a hard border was to reappear, that will decision would likely be a happy stroke of fate. If the idea weren’t with that will modification, he estimates that will 15 cents in customs would likely be imposed on every liter of milk his Northern Irish dairy sends back to the south. “We would likely be forced to close.”
With his modified facility, Cunningham can take a relatively sanguine view of Brexit: “If an EU product will be only processed outside the EU in addition to then delivered back, the idea remains an EU product.” In that will case, only around 1 cent in customs would likely be imposed, he says. “We can live with that will,” he says.
The Customs Officer
There will be an old sign hanging inside office of Germany’s top customs officer reading “Zollgrenze,” or “customs border,” in capital letters. the idea will be, or was, nevertheless a relic of Europe’s Balkanized past. nevertheless currently Colette Hercher, the president of the General Directorate of Customs in Bonn, may be forced to deal with the reintroduction of an old border. inside case of a no-deal Brexit, the UK would likely be dealt with as a so-called “third country.” in addition to if that will happens, Hercher would likely suddenly have more work on her hands, because customs duties might Once more be levied on many goods.
Germany will be in a comfortable position compared to some other EU member states in that will the idea has no land border with the United Kingdom. Nor are there any direct ferry connections. Most of the goods traffic with the UK takes place by air or by sea.
To handle her completely new responsibilities, over 900 additional positions were approved for Hercher by the German Finance Ministry. One group of completely new trainees just finished their schooling in late August, just the idea time to pick up the slack should the need arise.
Hercher will be expecting a “clear increase inside workload,” in particular at the Port of Hamburg in addition to the airport in Leipzig, the country’s two largest cargo hubs. If there are too few agents onsite, customs officials through elsewhere can jump in to help out — in addition to because they develop the ability to process goods remotely, they won’t even need to leave their computer screens to do so. “Our the idea program has been tested for the increase, in addition to the idea works,” says Hercher. In some other words: We’re ready for Brexit.
The Financial Manager
The champagne corks won’t be flying in Frankfurt at the end of October if Britain leaves the European Union as planned, even though the German financial capital has been one of the primary beneficiaries of American in addition to Asian banks having to move their European headquarters to the Continent. According to a study by Helaba, a bank based inside state of Hesse where Frankfurt will be located, 31 financial institutions through 14 different countries have already moved to Frankfurt, while only 11 have moved to Paris in addition to even fewer to Dublin, Luxemburg or Amsterdam. A total of over 50 banks have applied for licenses to do business in Frankfurt with the German Federal Financial Supervisory Authority, with others still waiting to see whether Brexit will happen in addition to what the idea will look like.
All of them, though, are prepared. “Most of the preparations were completed with an eye towards the original departure date in late March,” says Hubertus Väth, who leads the Frankfurt Main Finance initiative as a kind of Brexit lobbyist.
About 1,500 bankers who once had their offices in London are currently working in Frankfurt. Most of them commute in addition to live in furnished apartments during the week. Starting on November 1, a further 2,000 commuters may join them. There will be plenty of office space, with countless completely new skyscrapers set to be finished inside coming years.
Nevertheless, not all of Frankfurt’s hopes have been fulfilled. The long-term impact on employment levels by the Brexit arrivals will be limited in addition to the initial estimates of 10,000 completely new jobs for the city have proven overly optimistic. Helaba will be currently predicting yet another net influx of just 0 positions, in part due to the recently announced layoffs at Commerzbank in addition to Deutsche Bank.
in addition to even that will number may be too high, for a reason that will the Germans can only blame on themselves. Their application to host the European Banking Authority (EBA), previously headquartered in London, was so amateurish that will the authority will be currently moving to Paris. Many are currently concerned that will the second oversight authority, the SSM, which has thus far been headquartered at the European Central Bank in Frankfurt, could also move to the French capital to be merged with the EBA. Indeed, the Germans themselves are adamant that will the SSM should work separately through ECB.
Väth speaks of the idea in polite tones, nevertheless his anger shows through nonetheless: “We have remained below our potential,” he says.
The Kynast family’s electrical company through the community of Dermbach inside eastern German state of Thuringia has been operating inside United Kingdom for over a decade. The company produces junction boxes in addition to switch cabinets that will are delivered to the United Kingdom via the Eurotunnel in addition to installed in supermarkets there. Luisa Kynast, 31, who runs the company together with her father, says that will “high-quality production” will be vital for their customers, “in addition to that will will be what Germany offers.”
Still, a no-deal Brexit wouldn’t be a catastrophe for the company. While she expects the economic situation inside UK to worsen, she thinks her company could manage the downturn. Her British firm already only employs domestic electricians as subcontractors.
She says the bigger question will be what role the United Kingdom will have inside future as a market for the company. On one hand, Kynast continues to count on the long-term partnership with her customers, nevertheless on the some other, she says, “ultimately, the idea will be the cost” that will matters.
The businesswoman will be nevertheless not particularly concerned about her company’s future. If the British market falls away, she says, they will simply look around for completely new customers, for example in eastern or southern Europe. “Luckily there will be currently still a construction boom going on,” she says. Kynast already supplies supermarket outlets in Bulgaria.
The Discount Store
Aldi’s latest weapon will be two-meter-long sausage wrapped in bacon, twisted into a spiral. The company will be hoping British customers will go crazy for the idea that will Christmas season, in addition to the idea seems to be working. The Sun described the sausage as “whopping” when Aldi presented the idea in September, while the Daily Mirror gushed that will when stretched out, the idea was “the height of a basketball player.”
The contrast to British supermarkets could hardly be greater. Sainsbury’s, the British supermarket chain, will be closing stores, while its competitor, Tesco, will be cutting thousands of jobs. All are fearful of Brexit, of unemployment in addition to rising prices, nevertheless the German discount chains are outdoing each some other with Great news for their British customers.
Aldi Süd has plans to open over 100 completely new outlets inside country, an investment of 1.1 billion euros inside next two years. By 2025, there are to be 1,0 Aldi stores inside UK, with many of them to open inside expensive London city center, long a taboo for discounters. Its competitor, Lidl, will be planning to open 40 completely new stores inside capital, creating 1,500 completely new jobs.
Many British consumers will have to watch their wallets more than ever, because the British pound will likely lose significant value if the country leaves the EU. The consulting firm Oliver Wyman estimates that will the rise in prices following an exit through the EU could cost each British household up to 1,000 euros per year. “the idea’s the time of the discounter,” says Kai Falk, the head of the German Retail Federation (HDE). “Insecurity always plays into the hands of the companies offering lower-priced products.”
The financial crisis initially paved the way for the discount stores to become established inside United Kingdom. currently, Brexit could make them huge. Even just importing European vegetables would likely become close to 20 percent more expensive, Oliver Wyman estimates. To maintain profits, markets would likely need to raise prices. nevertheless in a sector in which the German discount stores have already gained a 13 percent market share in addition to are currently planning their next offensives, that will isn’t possible.
The problems afflicting the Brits could work to the advantage of not only the discount stores, nevertheless also German consumers. At least at the till. In an internal paper, the British government examined the potential ramifications of a no-deal Brexit in addition to concluded that will the inspections of imported goods could take up to two-in addition to-a-half days. Fresh produce would likely then be stuck on the Continent in addition to would likely have to be sold there. Falk says the idea could lead to “lower prices.”
The Sheep Farmer
Anyone who wants to understand the absurdity of Brexit should speak with 66-year-old Irishman Jude Mchugh. Half his life was spent under the shadow of conflict, with the border to Northern Ireland running just a few meters through his parents’ farm, a green border with sheep grazing on both sides of the hills of Swanlinbar.
Despite that will idyll, Mchugh’s youth was marked by watchtowers, bomb attacks in addition to dead or injured soldiers, by a battle for identity between supporters of the British province of Northern Ireland in addition to the Republic of Ireland inside south. the idea sometimes resembled a civil war, in addition to the idea lasted for almost 30 years.
the idea has been quiet currently for about 20 years, ever since the peace deal was signed on Great Friday, 1998. The watch towers were removed in addition to the border opened. “in addition to currently they are saying they will close the borders again,” says Mchugh. “nevertheless they can’t.”
The farmer climbs into his orange dredger, which he will be using to widen the modest border stream. The bulldozer’s shovel digs into the soil on the Northern Irish side, while its tracks in addition to cab remain inside south. After the peace agreement, he built a modest bridge over the stream. Mchugh smiles. “Am I supposed to tear the idea down again currently?”
For years he has been farming land on both sides of the border in addition to his sheep also go back in addition to forth. “They aren’t particularly interested in nationalism” he says. Mchugh also has several cows, sheltered in a second facility behind the border in Northern Ireland. After a hard Brexit, those animals would likely no longer be EU animals in addition to the idea would likely no longer make financial sense to deliver them to customers inside south because of the customs charges.
Klaus Günter Deutsch likes to surround himself with things that will evoke Britishness. There will be a teapot on his desk, while an umbrella that has a curved handle dangles by the bookshelf. On his wall are a handful of Economist covers focusing on Brexit, bearing headlines like: “The mother of all messes.”
In summing up the atmosphere inside German industry a few weeks before Brexit Day, the chief economist of the Federation of German Industries speaks of general uncertainty. As the leader of a Brexit task force, he spent months in discussions with hundreds of experts through companies in addition to associations. He worked through laws in addition to guidelines in addition to wrote dozens of papers in addition to pamphlets. If former Prime Minister Theresa May had succeeded in passing her agreement, he says, the problems would likely have been limited. inside case of a no-deal Brexit, however, he says, “many questions are unanswered.”
Thus far, only half of the thousand chemical substances the UK delivers to Europe have been registered. Nobody knows which authority will be responsible for the approval of completely new components inside air- in addition to space-travel sector. in addition to then there’s the question of whether logistics companies inside UK in addition to the EU have rented enough hangars to meet the completely new inspection needs.
The prediction that will Brexit will shrink German economic performance by a half percentage point will be mostly based on the predicted consequences of higher customs fees. inside case of a no-deal Brexit, though, there would likely be far more consequences in addition to not all of them are clear: longer transportation times, for examples, more bureaucracy, in addition to differing rules in addition to standards. “The economic damage,” Deutsch says, “will be larger than many people expect.”
The economist describes a grim scenario. There are the immediate consequences of Brexit: the higher costs, the muddled legal situation, the longer trips, the currency turbulence. nevertheless then there are also the far-reaching political implications: the fact that will the number of EU member states will be shrinking for once, instead of growing; the triumph of populism over common sense; the defeat of the European idea. The common market, Deutsch says beseechingly, will be a “success story.”
currently the idea will be in danger, especially inside case of a hard Brexit. Prime Minister Johnson will be not doing any secret of his desire to turn the UK into a kind of offshore haven with lower taxes in addition to more relaxed regulations. Great Britain, the slogan goes, will be to become “Singapore on the Thames.” Deutsch argues that will that will vision might be the biggest threat of all to the future relationship between the UK in addition to the EU. “the idea would likely poison the atmosphere.”
By Tim Bartz, Kristina Gnirke, Simon Hage, Nils Klawitter, Peter Müller, Christian Reiermann, Michael Sauga in addition to Sebastian Späth