The UK government has published a scenario describing the worst-case scenario when a country exits the EU – the “tough” Brexit, which Prime Minister Boris Johnson insists on. The hour “X” was scheduled for October 31. The document itself is dated August 2, 2019, its provisions were “leaked” earlier to The Sunday Times, after which the government had to disclose it.
Shortages of food and medicine, as well as street riots, are described in Operation Yellowhammer (Operation Yellow Hammer). Citizens and businesses are not ready for a tough Brexit, the document says, although large companies have the resources and opportunities for reorientation, small and medium-sized businesses are still under attack.
France is forced to introduce customs control on the border with Britain, to prepare IT systems and infrastructure for processing declarations (the document says that the situation in the port of Gibraltar will be slightly better). 50-85% of goods from the UK will not be able to process these documents or do not have time. The English Channel will not be able to store all British cargo stuck with customs clearance.
The situation can be resolved within three months, but with losses – the cargo flow will recover only up to 50-70% of the previous level.
At the same time, the British expect that their requests for energy supplies will be granted so that electricity will not rise, there will be no interruptions in gas.
Nevertheless, a sharp increase in electricity prices is expected – both for individuals and legal entities. And such a scenario will lead to negative political consequences.
Brexit will strike at one of the vulnerabilities in the country’s social sphere – the supply of medicines. The British practically have no practice of creating stocks; three-quarters of the drugs are imported through French ports. For some types of drugs, interruptions can reach six months.
But this is not all, because Britain imports veterinary products. According to the document, the country is facing outbreaks of animal infections, it’s impossible to properly organize the supply of vaccines right away, and there will not be enough aviation capacity.
Food trucks are stuck at the border, which will hit the supply of fruits and vegetables especially hard. Prices for them will rise. But that is not all – the food industry will experience problems, production chains will collapse. The result is that prices will skyrocket, the poorest part of the population will fall to the social bottom, and the poorest in Britain will be 14 million, including 4 million children.
According to economists, when Britain leaves the EU without an agreement, duties may be imposed on 5,200 goods, including food and clothing. A rise in prices is expected, in particular, for beef, cheddar cheese, tomatoes, The Guardian newspaper wrote. Since agriculture in the UK has a pronounced seasonality, for example, 80% of tomatoes and 70% of fruits are imported from the EU. With the introduction of duties on the volume of imports for 2017, the amount of these duties will amount to 9.3 billion pounds.
The introduction of duties according to WTO tariffs, for example, will raise prices for beef by 5-29%, tomatoes – 9-18%, cheddar – 6-32%.
Such a situation in the agricultural and food sectors will lead to the flourishing of the “shadow” business on both sides of the border, the introduction of food duties, and the ruin of businessmen who cannot afford to pay these duties.
Citizens are also unlucky – due to the introduction of inspection, queues are expected at the railway stations of Dover and London (St. Pancras), as well as at the port of Gibraltar. Not only that, Britain and the EU will not have time to establish data exchange, and this synchronization of information systems, in general, will take years. British citizens will automatically lose EU citizenship so that there will be a crowd in the consulates wishing to draw up documents. There is no doubt that the diplomatic missions will not cope.
Street riots are not ruled out, the document says.
At the same time, one point – 15 – was deleted from the document. According to The Sunday Times, it refers to the shutdown of two major British oil refineries and the dismissal of 2,000 of their employees. Naturally, along with other violations of the supply chain, this threatens to take off and not so low gas prices.
In general, the document is descriptive and does not contain forecasts regarding the impact of Brexit on key macroeconomic indicators. According to earlier forecasts of the European Commission, in 2019 Britain’s GDP growth may reach 1.3%, inflation – 1.8%, in 2020 – 1.3% and 2%, respectively. How political uncertainty or even instability will affect these indicators, no one undertakes to predict.
The situation with Brexit in the UK was a stalemate. Before the dissolution, the deputies managed to pass a law obliging Prime Minister Boris Johnson to postpone his exit from the EU, which is so far scheduled for October 31. The law contains a norm according to which the authorities should ask the EU to extend negotiations on Brexit, and a direct ban is imposed on leaving the European Union without a deal. Johnson himself said that he would not ask for anything.
At the same time, the parliament will not work until October 14, but before a forced vacation, he voted to oblige the government to provide information about the “hard” Brexit, which Johnson did not want. True, only Operation Yellowhammer saw the light of day, while some deputies wanted to see more – up to the correspondence of Johnson with his assistants in WhatsApp and other instant messengers.
After the publication of the Operation Yellowhammer note, British politicians are trying to hold their faces and not to plunge people into a panic. For example, Michael Gove, a member of the Conservative Party, tweeted that the predicted events described are “the worst-case scenario,” not the base case.
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