What really happens if there is no Brexit deal?

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This article was published in The Guardian

Taking your car abroad

In a sentence You’ll have to request a green card from your insurer if driving to Europe after 29 March.

Currently, a driver of a UK-registered car is allowed to drive anywhere in the EU, the EEA (European Economic Area), Switzerland and Serbia, and not have to carry a green card that proves you have insurance cover.

But if the UK leaves without a deal, all changes and drivers will be expected to carry a green card when in mainland Europe and Ireland. They are likely to be issued by an insurance company for free, but the industry is warning it could take up to a month to obtain one, so if no deal happens and you’re booked to go away with the car this Easter, you will need to act fast.

The official advice from the UK government is: “From 29 March 2019, in the event that there is no EU exit deal … drivers of UK-registered vehicles will need to carry a motor insurance green card when driving in the EU and EEA.”

Note that a green card (and they do have to be on green paper) typically lasts only 90 days, and if your insurance renewal comes up while you’re abroad, you will need one for each cover period. The card applies to the vehicle, not the driver.

Direct Line insurance says: “In the event of a no-deal Brexit, we have plans to ensure customers are provided with a green card if they drive in Europe on or after 29 March. Customers will need to contact us at least two weeks in advance of when they are due to travel.”

In Ireland, where 30,000 drivers commute across the border daily, and where shoppers from Dublin frequently head to Belfast and vice versa, the green cards issued are likely to be valid for one year. Irish insurers have prepared 400,000 green card forms in the event of no deal, and some UK insurers are now proactively sending green cards to customers in Northern Ireland.

Insurers say they are already incurring hefty costs to organise the cards and prepare their staff in call centres to handle an inevitable barrage of questions. The Association of British Insurers says it would much rather none of this was happening. “It remains the case that insurers do not want a no-deal Brexit; it would be bad for the economy and bad for our customers,” it says. “We continue to hope these arrangements are never needed and urge the government, UK parliament and EU27 to agree an orderly way forward.”

Meanwhile, if your UK-registered car sports an EU flag on its numberplate, you might want to buy a GB sticker. From 29 March, if the UK leaves without a deal, the government says: “You may need a GB sticker even if your vehicle has a europlate [displaying both the EU flag and a GB sign]. You will not need a GB sticker to drive outside the UK if you replace a europlate with a numberplate that features the GB sign without the EU flag.” 

Driving with a UK licence when abroad

In a sentence You will have to buy an International Driving Permit to drive in Europe, at a price of £5.50, with different ones required for France and Spain.

If there is no deal with the EU then recognition of UK driving licences in the EU ends. So British drivers will have to go to the Post Office and obtain an International Driving Permit (IDP), which you will need to carry with you in conjunction with your UK driving licence.

There is a curious twist to the international rules which means that if, say, you drive through France and into Spain, you’ll need two different IDPs. That’s because the 1949 IDP convention covers Spain, Malta, Cyprus and Ireland, while the 1968 IDP convention covers all other EU countries, plus Norway and Switzerland.

So at the Post Office you have to specify which permit you want, depending on which country you are visiting, or get both if driving between France and Spain or Portugal and Spain.

And just to add a little more complexity, the permit you buy for Portugal will last three years, but in Spain you’ll have to renew it every year.

The Post Office has set up a webpage dedicated to this process. But you can’t buy it online – you’ll have to head to a Post Office with your driving licence, passport and a passport-sized photograph.

As regards driving back and forth between the UK and Ireland, there has been significant confusion.

Last September the government’s official position was that an IDP would be required if driving across the Northern Ireland border. But in January this advice was withdrawn, and it now says: “If you hold a UK driving licence you should not need an IDP to drive in Ireland from 29 March as Ireland does not currently require IDPs to be held by driving licence holders from non-EU countries.”

It was also revealed this week that British citizens resident in Ireland – estimated to number about 300,000 – will be required to swap their UK driving licence for an Irish one at a fee of €55 (£48) if there is no deal on Brexit.

European Health Insurance Card

In a sentence They will no longer be valid and buying travel insurance will become essential.

For years, Brits travelling, studying and working in Europe have relied on the European Health Insurance Card (Ehic) that entitled the holder to state-provided medical treatment if they fell ill or had an accident in an EU/EEA country.

Two weeks ago, the UK government issued its latest advice on healthcare when travelling abroad, warning that if the UK leaves with no deal, our Ehics will no longer be valid.

It has advised anyone travelling on or after 29 March to any of the EU countries as well as Switzerland, Norway, Iceland and Liechtenstein, to buy travel insurance to cover healthcare “just as you would if visiting a non-EU country”.

It has said it is seeking agreements with countries on healthcare arrangements for UK nationals after Brexit day, but no such agreements are in place yet. Those studying or working temporarily abroad already won’t be able to buy travel insurance as they have already left. They will probably just have to risk it as, alternatively, they face having to buy expensive local insurance, which will run into several hundred pounds.

Ehic was never intended to cover long-term residents who had moved to another country, but many relied on it particularly if they spent only part of the year abroad, or for when they had just arrived in a new country. 

Visas and travel

In a sentence: Visa-free travel to Europe ends, paving the way for possible £52 90-day visas.

It’s arguably the craziest prospect of all, but if the Brexit impasse is not broken, British tourists face having to apply for a visa to visit most of mainland Europe.

That was the warning from Brussels this week where reports say there is a very real prospect of UK citizens having to apply for a €60 (£52) visa to enter the Schengen area, which includes most of the EU countries we generally visit.

The problem concerns talks that have become mired in a dispute with Spain over whether the British overseas territory Gibraltar should be described as a “colony” in the EU’s statute book.

If no solution can be found the UK will be left in legal limbo as it is not on the list of countries where a visa is required to visit the EU, nor on a list of countries with an exemption.

It could mean UK citizens heading to Europe for Easter having to pay for a Schengen visa or be left waiting for a bilateral deal. In a tit-for-tat move, EU citizens coming to the UK would face a similar scheme. Further down the line, the EU is proposing an electronic visa waiver system valid for three years at €7.

Questions also remain about how travellers will be treated when they arrive in Europe. Portugal is the only EU state so far that has said it will create a third lane at airport passport control to speed Brits through. Without a deal, they face having to queue with all non-EU passport holders, with the inevitable long delays. 

Flight compensation

In a sentence The government promises to keep EU flight delay payouts, but airlines could use changes to fight having to pay out.

European Union flight compensation regulations have been fought in almost every UK court, so could a no-deal Brexit give the airlines another opportunity to stop paying passengers after a lengthy delay or cancellation?

That’s the warning from lawyers this week – in spite of government promises that in the event of no deal, passenger flight rights will remain. The EU Withdrawal Act provides that EU regulations – as applied now – will convert into domestic law, meaning the same rules will continue to apply until legislators in the UK decide otherwise.

On the face of it, passengers will still be able to claim to up to €600 (£536) in compensation when airline problems cause their flight to land more than three hours late, or is cancelled. They will also be entitled to meals and hotels if the delays are caused by problems beyond the airline’s control.

However, with just over a month to go, specialist flight compensation lawyers say there has been no explanation as to how it will work. The compensation rules currently apply to all airlines based in the EU, and flights out of EU airports on non-EU-based carriers.

The wording of the new legislation would have to watertight, says Coby Benson, solicitor at Bott and Co, because in the past the airlines have used any ambiguity to dismiss legitimate claims, and have fought them through the courts.

“We anticipate that if the new adopted legislation is not entirely clear, the airlines will seize upon this to allow them to wriggle out of paying. This has been the history of this legislation from the start, and I can only foresee further court battles. If the airlines spot a get-out opportunity, they will try to use it to their advantage,” he says. 

Pets

In a sentence The EU pet passport scheme ends for UK travellers and their cats and dogs – replaced with expensive tests every time they travel.

If you were planning to take your dog or cat on holiday to Europe after a no-deal Brexit, you may want to think again after you have read this.

The UK’s participation in the European Union pet passport scheme in effect ends on 29 March. It means that cat and dog owners (the documents also mention ferrets) will need to show that their animals are healthy – and produce new documents to support their animal’s health when they arrive in the EU.

Pet owners will also have to show that their animal been effectively vaccinated against rabies by undergoing a rabies antibody titration test at least 30 days after inoculation, and no fewer than three months before they enter the European Union.

Pets will need to travel with an animal health certificate issued by an officially registered vet. This certificate can only be issued up to 10 days prior to entry into an EU member state.

The British Veterinary Association has warned that a no-deal Brexit will lead to pet owners facing longer waits (pdf) to get their animal cleared for travel, higher costs for the required vaccination, treatments and health certificates each time they leave the UK.

This comes at a time when many veterinary practices are already experiencing worker shortages and recruitment problems, it says. The advice is to book well ahead if you’re planning to take your pet abroad. 

Mobile phone roaming charges

In a sentence Phone companies say they have no plans to reintroduce charges – but don’t rule them out either.

Arguably the EU’s most significant consumer benefit of recent years has been the abolition of mobile phone roaming charges. The EU first capped then finally scrapped roaming charges across mainland Europe in June 2017.

It means EU citizens can use their mobile in another EU state as if they are at home. Call plans that typically include 500 free minutes and 2GB data can be used abroad without incurring extra charges, which, before the EU’s intervention, regularly cost more than the flight to your destination.

But if the UK crashes out of the EU at the end of March, the culture secretary, Jeremy Wright, has confirmed there will be nothing to stop mobile operators reimposing the charges.

So hooked on smartphones have we all become, a return of roaming charges might be considered one of the worst impacts of leaving the EU.

The biggest providers – Vodafone, O2 and EE – confirm they have no plans to reintroduce them on 1 April, but equally have not ruled out their reintroduction. Only Three has promised not to reinstate them irrespective of the Brexit outcome.

Currently, EU mobile phone networks are not allowed to add extra charges to calls made by customers of other EU operators. That ends with a no deal.

O2 says: “We will be working closely with the government and other European operators to try and protect the current arrangements, so our customers can continue to enjoy free EU roaming.”

Ministers have said the government will legislate to put a £45-a-month limit on the amount that could be charged for mobile data abroad. There will also be requirements for customers to be informed when they have reached 80% and 100% of their data allowances.

A future trade deal with the EU would include the abolition of, or limits to, mobile roaming charges, they have said. 

Pensions and investments

In a sentence Retirees to Europe should worry about the future of their state pension, but private pension issues were largely resolved this week.

The 200,000 British citizens aged over 65 who have retired to the EU – half to Spain – still don’t know if their UK state pension will be uprated every year after we leave the EU, or whether they’ll join the “frozen’ pensioners” in Canada and Australia who have seen their pensions shrivel.

The government has committed to uprate pensions across the EU in 2019 and 2020, but after that will only go ahead if there is a deal. It says: “We would wish to continue uprating pensions but would take decisions in light of whether, as we would hope and expect, reciprocal arrangements with the EU are in place.”

If they are not uprated, it could leave retirees in poverty and force a return to the UK. Someone retiring to Australia 20 years ago still receives the basic weekly UK state pension rate of £66.75 prevailing at the time.

But there’s better news on private pensions. For months the UK pension industry has been in limbo around whether they can look after a private pension taken out in the UK if the person has retired to the EU. But this week the European Insurance and Occupational Pensions Authority (EIOPA) in Frankfurt said providers could continue to operate much as before, even with no deal.

Steven Cameron of Aegon says: “There were concerns that UK providers might have been unable to service the policies of such individuals. We very much hope EU regulators will confirm they are following EIOPA’s recommendations and will not treat these policies as ‘cross border’ which should allow servicing to continue.”

Investments in funds, such as equity Isas, should be unaffected with a “temporary permissions regime” in place even if we crash out.

The much bigger picture is what happens to stock markets and sterling in the event of a cliff-edge withdrawal. Sterling remains 12% below the level it was against the euro before the referendum, and currency dealers expect it to fall below €1.10 and $1.20 – and possibly much more – if there is no deal. 

Bank accounts

In a sentence The EU-mandated £85,000 safety net will remain and the vast majority of UK account holders should be unaffected.

The immediate impact of no deal on UK bank account holders is likely to be minimal, but the cost of card payments between the UK and the EU is likely to rise and processing times become slower.

Banks report that they have been receiving calls from worried Brits living in the EU who regularly access their UK-based bank account. Will a hard Brexit mean they can no longer use these accounts? The banks are assuring customers that they can continue to use them and transfer money overseas as they did before.

Even if a bank appears to be from an EU country, there are few issues. For example, both Santander UK and Bank of Ireland (UK) are domiciled in the UK for regulatory purposes and post Brexit will be treated exactly the same as Lloyds or Barclays.

However, there are those who are domiciled outside the UK and use EU membership to “passport” their services to the UK. But even here agreement has been reached, with a temporary permissions regime allowing them to carry on in the UK for three years after Brexit, and apply for authorisation during that time.

The £85,000 protection for deposit accounts is partly the product of EU directives.

But the Financial Services Compensation Scheme (FSCS) says: “FSCS protection for UK-based customers of UK authorised firms will not change, regardless of whether the UK leaves with or without a deal.”