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finance

Brexit/City: duck and cover


The UK government has published guidance on a no-deal Brexit. Rarely has official reassurance been quite so alarming. The documents resemble those early-1980s booklets that advised people to hide under kitchen tables in the event of nuclear war. But who are they for?

The advice surely would not suit consumers, who were given only skimpy details about what a hard Brexit might actually mean. The financial services pamphlet, part of a first batch of “technical notices” released by the government on Thursday, hinted only at higher costs for card payments, as UK-based providers are shut out of the EU’s central payments infrastructure.

The plans are not for companies either. Big banks and insurers have been making their own no-deal plans for a while, under the urging of the Bank of England and the Financial Conduct Authority. Both bodies are worried about contract continuity. Many companies have taken the view that it is foolish to talk about transitional periods in the context of a no-deal exit; to get a transition, you have to sign a treaty. As a result, they have set up shops in EU cities that will be ready to go at the flick of a switch, should the UK crash out.

The plans read as if they were written for two audiences: Brexiters within government, who were promised details on a no-deal exit at the Chequers summit last month; and Brussels, as a plea to give ground.

The UK says that whether there is an exit deal or not, it will grant temporary authorisations to European Economic Area companies to continue doing business in the UK, for up to three years. So far, the EU has given no sign it will reciprocate.

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The UK government is trying to show it is confronting the problem in a sober, grown-up fashion. Hence, this series of documents. Their transparent purpose is to hint that a no-deal exit — like radioactive fallout — could hurt the EU as much as the UK.

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