LONDON - The famous stiff upper lip for which Britons used to be known is evident in their country’s contingency plans for leaving the European Union without an exit deal. Government papers issued on Thursday distil the economic risks of red tape, border delays, and financial disruption in dry and sometimes technical language. That cannot mask the extent to which the UK is reliant on Brussels’ good will.

The Brexit minister, Dominic Raab, spelt out a range of problems that could crop up and how different sectors of the economy could prepare. For example, drugmakers were urged to build an additional six weeks of medicine stockpiles to cope with potential supply disruptions. Finance, which contributed 119 billion pounds to the UK economy last year, or 6.5 percent of the total economic output, faces particular challenges.

For example, in the absence of EU action, European clients would no longer be able to use the services of UK-based investment banks and those banks might not be able to service existing cross-border contracts, the government said. Britain is pragmatically offering a grace period of up to three years, which it dubbed a ‘temporary permissions regime”, to EU banks and clearing houses in the UK. But unilateral action will not be enough to eliminate the risks and EU cooperation will be necessary to ensure the validity of billions of dollars of insurance contracts, interest rate swaps and other derivatives. A similar need for EU action crops up again and again in the documents.

So far, Brussels is keeping its cards close to its chest. European Commission Vice President Valdis Dombrovskis said in cross-border contracts could probably continue regardless of Brexit and an EU document in July appeared to downplay the whole issue. Wholesale banks operating in London fear that there might not be enough time to change all old contracts to new ones by March 2019, the scheduled date for Britain to leave the EU.

The EU’s stance may be a negotiating tactic. And the consequences of a no-deal Brexit have already been thrashed out even before the UK government waded in. But Britain is finally admitting the extent to which it is at Brussels’ mercy.

CONTEXT NEWS

- UK companies trading with the European Union would face more red tape and possible delays at the border if the government were to fail to negotiate an exit deal before Britain leaves the bloc, according to British government papers released on Aug. 23.

- Dominic Raab, Britain’s Brexit minister, said he was confident the two sides would reach a deal, but set out in a series of notes what could change without an accord.

- Britain, which is due to leave the EU on March 29, has yet to reach an agreement with the trading bloc about the terms of its departure.

(Editing by Swaha Pattanaik and Karen Kwok)

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

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