Boris Johnson told no-deal Brexit will leave crush domestic policy plans - Guardian

The Guardian has run an article referencing a new report by a Whitehall thinktank, concluding that Boris Johnson’s ambitious domestic agenda would be crushed by the pressing needs of the emergency that would follow a no-deal Brexit.

Key comments in the article:

The Institute for Government (IfG) warned there is “no such thing as a managed no deal” and the hard Brexiters predictions of a “clean break” from the EU will not materialise.

In its report on no deal, the IfG predicted that the union of the United Kingdom would come under “unprecedented pressure” in the event of a no-deal Brexit, with Northern Ireland “most acutely affected”.

It said that legislation to introduce direct rule in Northern Ireland with immediate effect would be needed to get through a no-deal Brexit if the devolved government is not restored by the end of October.

“Johnson may well find that having left one political union, he spends an increasing proportion of his time trying to keep another together,” it said.

The IfG, which has offices next to the Foreign Office near St James’s Park, has regular access to lawmakers and top officials enabling it to give frank assessments on all aspects of government.

However, the report outlines just how uncertain the future would be for Boris Johnson after a crashout, suggesting everything other than Brexit would be overshadowed.

“No deal is a step into the unknown: the prime minister’s second 100 days will be even more unpredictable than his first,” the report says, adding that the EU is unlikely to agree to negotiate any “side deals” to soften the impact.

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“Rather than ‘turbo-charging’ the economy, as Johnson has suggested, the government is more likely to be occupied with providing money and support to businesses and industries that have not prepared or are worst affected by a no-deal Brexit – as well as dealing with UK citizens in the EU, and EU citizens here, who have been similarly caught out,” it says

The authors reveal that the government’s planning assumptions are “locked away on secret computers known as Rosa terminals” across Whitehall in classified documents but warns that “as the name suggests these are just assumptions”.

Nobody can predict how the country, businesses and ordinary voters will react to no deal, something the IfG has been saying for some time, say the authors, Joe Owen, Maddy Thimont Jack and Jill Rutter.

“The risk registers that exist across Whitehall for a no-deal Brexit may have detailed plans for how to manage anticipated risks.

“But some of the biggest potential headaches will come from those issues that have not been foreseen,” the reports concludes.

The IfG report warned that Johnson’s emergency efforts, now led by Cummings and Gove, will drain the capacity of Whitehall and government and crowd out his ambitions for domestic reforms.

It pointed out that Theresa May said her priority was stamping out “burning injustices” when she assumed power and Johnson’s ambitions could similarly be stymied.

“Deal or no deal prime ministers need time, capacity and political capital to spend on their priorities,” the authors say, warning how a Brexit crisis could swamp efforts.

“Brexit is likely to preoccupy the work of the civil service for years to come. There will be at least 16,000 officials working on it by the autumn, and that number could still increase,” it says.

“Delivering a no-deal Brexit would leave the prime minister with little space for an ambitious domestic agenda.

“Whitehall would be working flat out on Brexit for months, with many areas of work extending for years,” the report adds.

No matter how keen Johnson and his new team are to institute a new domestic agenda, “major showdowns in parliament would continue, on the budget or Queen’s speech – both due shortly after 31 October”, says the report.

“The difficult choices that have been unresolved for the last three years will not evaporate overnight on 31 October. And Brexit will remain the key dividing line in a parliament in which Johnson’s government has a wafer-thin majority, and one that is constantly under threat,” it concludes.

In the coming weeks, it says the whole of government must shift to no-deal planning with thousands of civil servants moved to operational no-deal centres immediately.

The report also suggests an emergency Brexit budget may be needed in the autumn, something the new chancellor is said to be looking at already.

Market implications:

It is indeed going to be a rocky time ahead for the Pound as the clock ticks down to the Brexit date, "31st Oct, Brexitween". GBP/USD is likely to skid along the bottom of its ranges as uncertainty prevails. It is certainly going to be tough grounds for the Bank of England, (BoE), as well. 

"The BoE is stuck with policy on hold until there's more clarity on how Brexit is going to unfold. But since markets don't believe that the BoE's next move in rates is up, they'll be looking for any excuse to price in further easing, which we think Carney will be able to deliver, given the weaker global backdrop," analysts at TD Securities said ahead of this week's BoE meeting.