The EU has been working on “emergency legislation” in financial market regulation in the event of a hard-Brexit, according to reports in German financial newspaper Handelsblatt quoting EU sources.
If the UK crashes out without a deal, it means EU legislation in the UK would be invalidated because it would leave the single market and customs union.
Financial transactions of all kinds could be affected, the President of the German Financial Supervisory Authority Bafin Felix Hufeld at the Handelsblatt bank summit warned.
He said: “A hard Brexit would intervene in hundreds of thousands of contracts and create serious uncertainty about the ability of institutions to operate in each other’s country.”
Managing Director of the International Monetary Fund, Christine Lagarde, warned on Monday a chaotic Brexit will lead to “serious disruptions” in Britain.
As well as the “shrinkage” in the UK economy, the EU fears it will face “substantial costs” as a result.
Because of Ms Lagarde’s position, any word from her can lead to strong reactions from the financial markets and this is coupled with news that the EU is considering a special summit in mid-November because of the lack of progress in Brexit negotiations.
When asked about the prospect of a no-deal, Elmar Brok, Brexit representative of the European People’s Party group (EPP) in the European Parliament, said: “The odds are fifty-fifty.
“Should it actually come to a hard Brexit, the consequences will be tough.”
The EU commission has not declared publicly how it will deal with the prospect of a no-deal Brexit.
It has urge all financial markets to prepare for the prospect of a hard-Brexit.
But a spokesman for the Commission responded to a request by Handelsblatt saying: “No comment.”
Critics of the bloc say this is “unsatisfactory”.
Markus Ferber of the Christian Democrats said: “The Commission must inform the Economic Committee of its plans.
“After all, they can not just decide on the changes to the law necessary for a hard Brexit.”
The situation is made more complex by the bureaucracy of the European Union.
EU financial market regulation have to go through all EU institutions.
It means bills submitted by the Commission must be decided on by both the EU Council of Finance Ministers and the European Parliament.
The EU legislative procedure normally takes at least one year.
Mr Brok stressed that there may not be enough time with the rapidly approaching deadline.
He said: “We only have six to eight weeks left for the Brexit emergency laws.”
(Additional reporting by Monika Pallenberg.)
Source : EXPRESS