HAMBURG, Germany – I learned by mail the other day that Brexit poses a risk to my life insurance. My British insurance company, not knowing if it could legally cover the citizens of the European Union like me once Britain leaves the block of 28 countries, has told me that it intends to transfer my policy to a subsidiary in Dublin.
Until now, most news and commentaries on Brexit relate to how London and Brussels will handle their unprecedented divorce. We have paid less attention to how European governments, businesses and citizens are fighting the hundreds of ways things will change for them by 11 pm. March 29, when Britain officially leaves the union, with or without an agreement in place. My transfer of insurance is just one answer to a particularly difficult question: what will happen when hundreds of millions of EU citizens are cut off from Europe's most powerful financial pump? , the City of London?
At the moment, it seems possible that all this is happening in the worst possible way, with no agreement in place between Britain and the union on how to handle the separation. Theresa May, the British prime minister, will probably fail with her draft transitional regulation; Too many members of the House of Commons seem to have the impression that her draft withdrawal agreement, which she negotiated with Brussels, does not go far enough. But the European Union insists that she will not see the deal again.
As a result, one minute Britain will be part of the union; at 11:01 that night, it will not be the case. It's like, in a fraction of a second, cutting off all the branches of a tree and observing what happens to that tree and the community that derives some of its benefits.
Without agreement, trade relations between Britain and the European Union would return to the basic rules of the World Trade Organization. These imply that neither party is allowed to treat each other more favorably than their trading partners worldwide. If Britain withdrew from the Union without any bilateral trade agreement, a customs regime should be put in place between Britain and its European neighbors. In the meantime, thousands of businesses on both sides and millions of customers will be plunged into costly confusion. At least my insurer has a plan; many other companies are still struggling to find one.
The old British title, once amusing, entitled "The Fog in the Channel – Continent Cut Off" could finally reveal a truth, especially for the key sector of Germany: the car manufacturers. In Europe, Britain is by far their biggest market. Last year, German-based car manufacturers exported three times more cars to Britain than China, according to data from their professional association. The audit firm Deloitte estimates that the number of German cars sold in Britain could rise from 800,000 to 550,000 a year, putting the 18,000 German jobs at risk.
The auto industry is a prime example of the complexity and dirtiness of a "tough" Brexit. It's not just that fewer British customers will buy German cars. As a result, well-established just-in-time supply chains could be destroyed. As reported by the keeper, the crankshaft of a BMW Mini crosses the Channel three times before being part of the finished car: the cast is made in France, then goes to a BMW factory in Warwickshire where it is pierced, then goes to Munich where she is fixed in the engine. The engine is eventually returned to the Oxford Mini factory to be mounted in the car. With a customs regime in place, all these cross-Channel trips will become much more expensive.
The Brexiteers claimed that Britain could get rid of the principle of free movement of people, while maintaining the usual level of free trade with the continent. These were chimeras. The same was true of the expectation that, as Brexit approached, the European Union would comply with the requirements of Great Britain.
Despite the Brexit damage in the remaining 27 countries of the Union, their message to London is unshakeable: it will be painful for both of us, but we can not let you change the rules. Germany, which sells many more cars to the rest of the Union than to the British, insisted on this hard line throughout the talks. Germany does not want to lose British buyers, but it can not afford to undermine the structure of the common market that underpins its sales to the rest of Europe.
And even if Germany was ready to move, the most important question is where. No one in Berlin knows what to give Mrs May to overcome Parliament's resistance to the withdrawal plan. Chancellor Angela Merkel reportedly sought clarification from Theresa May at the last Brussels summit but, as in previous attempts, she did not get a detailed answer.
But think about this: what happens if Ms. May really wants her agreement to be rejected? Parliament should then deal with the disorder of Brexit itself. And, as things stand, none of its members want a hard Brexit either. Aside from the tough ones, the more Westminster lawmakers are pushed into the abyss of Brexit and the more they see the horrors, the more they come to adopt a third option: to make the vote on Brexit to the people by a new one. referendum.
This would, of course, undermine the credibility of democracy. The uncompromising Brexiteers would regret the betrayal of the majority of voters who voted in favor of permission to leave in 2016. The gap that runs through the country could become deeper and even more difficult to cure.
But this allows either a second vote or a free fall – without safety net – in an economic vacuum. Choose your poison, Great Britain. But before that, take out life insurance. I can recommend a company based in Dublin.