Brexit campaigners have long urged PrimeMinister Theresa May's government to do more to prepare for ano-deal departure from the European Union. They said it wouldbolster her negotiating position by making threats to walk outmore credible. Now the government is stepping up its efforts,but the details are a reminder of just how precarious aposition Britain is in.The plan is to getthe message across to companies and citizens through thesummer. It might also help focus the minds of lawmakers in the fallwhen May asks them to approve the divorce deal she strikes withBrussels—or risk the prospect of legal limbo and a hit to theeconomy.Health Secretary Matt Hancock said on Tuesday thegovernment is working to make sure medical supplies won't run out.“We are working right across government to ensure that the healthsector and the industry are prepared,” he said. “This includesthe chain of medical supplies, vaccines, medical devices, clinicalconsumables, bloodproducts.”U.S. pharmaceutical giant Merck &Co. is also planning for the possibility of a temporary supplyblackout and may stockpile as much as six months worth of goods,Bloomberg reported in June. The contingency plans includefactoring in as much as two extra days of travel on routes betweenU.K. and EU destinations to allow for delays caused by borderchecks.No-deal is a problem for food supplies because checks atports—both for customs and regulations—could slow down deliveriesand cause bottlenecks. Restrictions on free movement of labor couldalso have an impact on farmers' ability to grow and harvestfood.Brexit Secretary Dominic Raab indicated on Tuesday thatplans are being made to stockpile food, but it's not the governmentitself that's doing it. He also tried to offer some reassurancethat Britain gets its food from lots of places beside the EU.Thegovernment's own documents say 70 percent of agri-food imports comefrom the bloc. J Sainsbury Plc warned in March that closing theborders just for a few days would result in “a food crisis thelikes of which we haven't seen.”

|

Road Blocks, Derivatives, and Grounded Flights?

In anticipation of bottlenecks, the government has a plan to turnpart of a major highway near the port of Dover into a holding zonefor trucks. The other half of the motorway would be open totraffic, but only half as much as usual.The Bank of England reckonsthere are 96 trillion pounds ($126 trillion) ofderivative contracts at risk in the event of a no-deal Brexit. TheU.K. side is taking steps to provide a temporary fix. TheTreasury announced some legislation on Tuesday that would allow EUentities to continue operating in the U.K. while they seek newpermissions. U.K. regulators want a coordinated governmentalresponse. Their EU counterparts instead are pushing companiesto make their own preparations.Most officials don't think flightswill be grounded. They reckon that even in the event of a no-dealscenario, the two sides will be able to come up with a temporaryfix so that flights can take off. But Ryanair has issued direwarnings that planes might not be able to fly. That would make fora happy Easter holiday season. Easter is April 21; Brexit dayis March 29.

|

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.