Downing Street has insisted that Theresa May is confident of securing a Brexit deal with Brussels despite Liam Fox’s assertion that the UK appears set to crash out of the EU without reaching an agreement.
Whitehall sources said they believed there was only a very small chance of the government failing to secure a deal, but that preparations were being stepped up in what they described as the unlikely event of that taking place.
They suggested that the international trade secretary remarks on Sunday were part of a deliberate strategy to talk up the prospect of a no-deal Brexit in order to put EU leaders under pressure to take the prime minister’s Chequers plan seriously.
Ministers, however, have been growing increasingly anxious that Brussels’ determination to stick to its red lines despite a round of intense British diplomacy in recent days – including May cutting short her holiday to meet the French president, Emmanuel Macron – could spell trouble ahead.
Fox put the chances of a no-deal Brexit at “60-40” on Sunday despite both sides saying they wanted to reach an agreement on the terms of the UK’s departure from the bloc in March 2019.
He blamed the intransigence of the Brussels machine for the increasing risk of no deal. “It’s up to the EU27 to determine whether they want the EU commission’s ideological purity to be maintained at the expense of their real economies,” he said.
His comments came just two days after the Bank of England governor, Mark Carney, said the chances of a no-deal Brexit were “uncomfortably high” and that the financial system was preparing for the potential shock.
The foreign secretary, Jeremy Hunt, also said the Brexit process was “heading for no deal by accident”, stepping up his warnings about a potential collapse in talks. “This is not project fear, this is project reality,” he said.
One cabinet source said: “We’ve been telling business for two years that no deal isn’t going to happen, and we still believe that it’s a very small chance, but it’s not a 0% chance so government has got to prepare.
“There is an awakening in Europe of the damage to them of no deal and that most member states have no plans for it, so it is rising up their agenda. Clearly talking about it is very difficult to do without spooking people.”
The next round of negotiations between the UK and European commission is scheduled for 10 days’ time. Business groups, meanwhile, said ministers had not given them enough time to prepare for no deal.
Adam Marshall, the director general of the British Chambers of Commerce, said: “Government needs to show that it’s doing everything within the UK’s control so that businesses know what they would need to deal with on day one.
“There’s a real disappointment among businesses that not enough time and preparation has been spent on what happens in the unwelcome event that there is no deal. If I was sitting in the cabinet office right now, one of my number one concerns would be, how do I give businesses every certainty and security?
“That needs to be much higher in people’s minds because of course people’s livelihoods and the state of the wider economy does depend on having that information.”
His comments came as the plane-maker Bombardier said that stockpiling parts to mitigate the impact of a no-deal Brexit would cost its Belfast business up to £30m. Michael Ryan, the head of the firm’s Northern Ireland operation, said spending such a sum to store goods is “not how we can afford to run a business” and is “cash that I don’t have”.
There are fears that the movement of goods could be disrupted by long queues at ports if the UK is unable to reach an agreement with the EU. The Belfast plant operates a “just in time” supply policy to avoid the expense of stocking excess materials.
The shadow Brexit secretary, Keir Starmer, tweeted: “No deal would be a catastrophic failure of government, which no government should survive. The cause: PM’s reckless red lines, Tory divisions & fantasy Brexiteer promises. Parliament has a duty to prevent it.”
