World Economy

EU Warns British Companies of Shut-Out

 EU Warns British Companies of Shut-Out EU Warns British Companies of Shut-Out

The EU is systematically warning UK companies of a regulatory chill after Brexit as it seeks to accelerate the private sector’s preparations for a no-deal UK exit, according to recent legal notices.

Even as negotiators neared a breakthrough in Brexit divorce talks, EU regulators issued a flurry of “be prepared” memos to about 15 industries in November and December, ranging from drugmakers, seafarers and mineral water producers to haulers and airlines that rely on UK operating licenses, Yahoo reported.

The documents call on companies to be ready for the UK to become “a third country” on March 29, 2019, with no automatic right to operate in the single market. They also warn that operating licenses will automatically lapse after Brexit and that many groups may have to create EU entities for continuity of business.

The warnings triggered an angry response from David Davis, the Brexit secretary, who accuses the EU of measures that could jeopardize existing contracts or force British companies to decamp to the continent if the two sides fail to reach a deal.

Davis’s complaints were outlined in a letter sent last month to Prime Minister Theresa May and leaked to the FT this week.

“We are surprised...the UK government is surprised the commission is preparing for a no-deal scenario,” retorted Margaritis Schinas, the commission’s chief spokesperson, on Tuesday.

The flare-up highlights the contrasting approaches to no-deal preparation taken in Westminster and Brussels. While the UK has emphasized government contingency planning, laying aside £3 billion ($4.06 billion) to build up regulatory and customs capabilities, the EU is highlighting risks so the private sector makes arrangements for “all circumstances”.

EU negotiators see it as a positive if companies take no chances and trigger comprehensive contingency plans for Brexit, especially if that involves moving business activity from Britain to the continent. A strict approach has also been applied in the awarding of some EU contracts and funding applications.

“We’ve heard pretty concerning reports about negative treatment of UK businesses and universities since the referendum, either on contracts, collaboration or funding,” said Adam Marshall, director-general of the British Chambers of Commerce.

May’s government sealed a divorce deal with the EU in December and hopes to agree transition arrangements by the end of March.

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