It is entirely possible that Britain will leave the European Union without a transition agreement, and companies need to do more to prepare for an abrupt departure, Irish Central Bank Deputy Governor Ed Sibley said yesterday (17 October).
Negotiations on the terms of Britain’s exit from the EU have made slow progress before a March 2019 deadline. Talks on the transition period have not even begun.
EU leaders meet on Thursday and Friday to discuss Brexit, and a draft communique showed they won’t adopt guidelines on possible transitional arrangements until December.
JPMorgan said on Monday the chance of a “no deal” Brexit had risen to 25% from 15% previously, in line with the consensus of a Reuters poll of economists published last month.
“It is entirely plausible, while it might well be regrettable, that there will be a hard Brexit with no transition period, and much more work needs to be done to prepare for this plausible scenario, particularly in the insurance sector,” Sibley said in a speech at a conference in Dublin.
One of Ireland’s senior civil servants told the same conference that Britain had failed to understand that while a disorderly exit would be disastrous for both it and Ireland, it might be a price the rest of the EU is willing to pay.
“The worst-case scenario of Britain leaving in a disorderly fashion would be a catastrophe for us, for the UK, but for the EU as a whole, for many counties in the EU, it won’t be a catastrophe, it will be a cost,” said Robert Watt, secretary general at Ireland’s Department of Public Expenditure.
“That’s something, particularly in the debate in the UK, that’s missed. I think this is what the UK have misunderstood. There is a cost and Europe is willing to pay that price in order to keep the union together.”