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Brexit no deal 'would cause major disruption for EU members'

By Andrew Woodcock

The European Commission has issued a warning to governments, businesses and citizens in the 27 remaining EU states to prepare for "significant disruption" as a result of Brexit.

Brussels officials said a no-deal cliff-edge withdrawal in March 2019 cannot be ruled out and warned that "preparation must therefore be stepped up immediately at all levels and taking into account all possible outcomes".

A 16-page document warned of the possibility of long queues at borders and ports, disruption to planes and new restrictions on data transfers.

A no-deal Brexit could mean "significant delays" to transport and a "significant drawback" for trade, while UK individuals and organisations could suddenly become ineligible to apply for EU grants and bid for EU contracts, it said.

The commission insisted that its advice to undertake contingency planning for the worst possible scenario was not "a sign of mistrust in the negotiations".

The International Monetary Fund (IMF) later amplified concerns by warning a Brexit crash-out could wipe out 1.5% of member states' economic output. This would be a cumulative cost of $250bn (£192bn) - and the loss of one million jobs.

The Republic would be the worst hit due its close linkage to the UK economy. Other countries with close links, Netherlands, Belgium and Luxembourg would also suffer heavily.

The IMF assessment was more stark than previous work it had done on the issue because it factored in supply chain disruption, tariffs effects, and the impact on financial services.

Top Whitehall mandarins warned MPs of "horrendous consequences" if a cliff-edge withdrawal was accompanied by "spiteful or ignorant" behaviour on either side.

The chief executive of the Civil Service, John Manzoni, told the Commons Public Administration and Constitutional Affairs Committee: "We will be ready for a no-deal Brexit. Not everything will be perfect.

"We have to prepare in the event that there are either spiteful or ignorant activities by third parties. That obviously makes it very uncomfortable and that's what we have got to try and do our best to mitigate against."

Customs chiefs told Parliament introducing Theresa May's favoured facilitated customs arrangements at borders and ports could alone add extra costs of £700m a year on business.

Jim Harra, of HM Customs and Excise, told the House of Lords EU External Affairs Committee that the additional cost would arise because traders would have to work out which of two different tariff rates they need to pay on each cross-border movement.

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