EU warns Britain it is heading for a no-deal Brexit

The European Union delivered a stark warning on Wednesday that Britain was headed for a damaging no-deal Brexit, with London’s ideas on replacing the contentious backstop to unlock an accord falling short just six weeks before Britain is due to leave.

Addressing EU lawmakers sitting in Strasbourg, European Commission President Jean-Claude Juncker said British Prime Minister Boris Johnson had told him on Monday that London still wanted a deal, but would leave with or without one on Oct. 31.

Pro-Brexit lawmakers cheered and applauded in the chamber.

“There is very little time left…The risk of a no-deal is very real,” said Juncker, his comments weighing on the sterling.

EU leaders will meet for a make-or-break summit in Brussels on Oct.17-18, just a fortnight before Brexit is due to materialize more than three years after Britons voted to leave.

But U.S. investment bank JPMorgan sounded negative on Wednesday about the prospects of Johnson striking a deal then after recent rounds of talks between the two sides showed significant gaps remain.

Britain is not likely to present a complete set of detailed, written proposals of how it would want the text of the existing – but stalled – Brexit deal changed before the end of the month, UK and EU sources said.

“If that is the case, the summit will end with nothing,” an EU diplomat dealing with Brexit in Brussels said. “If there is to be a deal, it must be prepared to a large extent in advance. It is too technical to leave to the leaders at the last minute.”

“A clear outline must be there in advance. Expecting that the leaders would suddenly come up with a magical solution to such complex matters is completely unrealistic.”

In a worst case scenario, a no-deal Brexit could mean severe disruption to trade, supplies of medicines, fresh foods and a possible rise in public disorder, according to the British government’s contingency plans.

Such a sharp break in economic ties, ending four decades of EU membership, “might be the United Kingdom’s choice, but never the choice of the EU,” Juncker said, highlighting how the bloc wants to avoid blame if Britain crashes out.

Juncker said London must present realistic proposals to replace the Irish backstop arrangement in the Britain-EU divorce agreement, which former premier Theresa May agreed with EU leaders but which was rejected by the British parliament.

“I am not emotionally attached to the Irish backstop,” Juncker said. “I have asked the prime minister to make, in writing, alternatives,” he said, calling it a safety net to avoid a divided Ireland after Brexit.

His pessimistic tone was echoed by Finland’s minister for European affairs, Tytti Tuppurainen, who also spoke in the parliament, saying a no-deal Brexit “is a quite likely outcome.” Finland holds the EU’s rotating presidency.

However, many EU lawmakers warned against a no-deal, both to avoid an economic shock and because they do not want to see Britain abandon its commitments to EU social and environmental standards and become a low-tax, low-regulation rival.

“We will not accept a Singapore on the North Sea,” said former Belgian prime minister Guy Verhofstadt, a liberal EU lawmaker and a member of the parliament’s Brexit committee.

In at times bad-tempered debate underscoring general weariness on the tortured issue of Britain’s pending departure, senior EU lawmakers took other jabs at the noisy contingent of British eurosceptic deputies in the chamber.

Manfred Weber, leader of the center-right EPP group, called Brexit “stupid”, while he and Verhofstadt took aim at British plans for greater sovereignty at a time when the parliament in Westminster has been suspended by Johnson.

“Brexiteers claimed Westminster would take back control, but now they shut it down,” Weber, a German lawmaker, said in Strasbourg, as the UK Supreme Court in London continued hearing arguments on whether Johnson acted unlawfully in suspending the parliament in the run-up to Brexit.

The European parliament is due to adopt a resolution later on Wednesday calling for Britain to be granted another extension to allow more time for London to agree its divorce terms.

Britain’s departure has already been delayed twice since March and Johnson has vowed he would not seek another lag.

The EU’s chief negotiator, Michel Barnier, said that a no-deal Brexit would not resolve any of the issues around the rights of EU citizens, the Irish border and British obligations under the bloc’s long-term budget.

“If the United Kingdom leaves without a deal, all these questions will not disappear. They are still there,” Barnier told the EU chamber. “Some three years after the Brexit referendum we should not be pretending to negotiate.”

Source: Reuters