Johnson Doubles U.K.’s Spending on No-Deal Brexit Preparation

(Bloomberg) -- The U.K. government doubled spending on no-deal Brexit preparation in the latest sign new Prime Minister Boris Johnson is serious about leaving the European Union -- with or without a divorce deal -- on Oct. 31.

Chancellor of the Exchequer Sajid Javid set aside 2.1 billion pounds ($2.5 billion) of new cash, including an immediate 1.1 billion pounds to improve border and customs infrastructure and ensure access to critical medical supplies, the Treasury said in an emailed statement Wednesday. The remainder will be made available to government departments if needed.

“A lot of the work was already going on, but what we needed to do was to turbo-charge it, to make sure that we are properly, genuinely, ready on Oct. 31," Javid told Sky News on Thursday. "In 91 days we will be leaving the EU. We want to leave with a good deal, something that abolishes the undemocratic backstop. But if we don't get that good deal, we will be leaving with no deal."

Johnson has made leaving the EU “do or die” by Halloween the central pledge of his premiership since taking office July 24. He's pushing the EU to renegotiate the deal brokered with Theresa May, and wants the bloc to drop the so-called Irish backstop -- a fall-back position designed to keep the border with Ireland open, but which ties the U.K. to EU rules until a mutually agreed solution to customs controls can be found.

Johnson's hardline position has triggered a slump in the pound as he hinted he may not even hold further negotiations with the EU to try to secure a smooth exit. He's shown no signs of backing down, and has instructed government departments to ensure they're ready for a no-deal split. Javid said the first thing he'd done on becoming chancellor was to ask every department what resources they needed to prepare for a no-deal Brexit.

Read more - What ‘No-Deal Brexit' Means and Why It's a Big Risk: QuickTake

“With the change in government we rightly wanted to make sure that we are absolutely ready in every way," he said.

The new funding doubles the amount made available for no-deal Brexit planning this financial year to 4.2 billion pounds, and brings the total cash allocated to 6.3 billion pounds. It's designed to show Johnson is putting his money where his mouth is when it comes to preparing for the possibility of the U.K. crashing out of the European Union in three months' time.

The new funding includes:

• 344 million pounds to prepare new border and customs operations
• 434 million pounds to ensure supply of vital medicines and medical products, including through freight capacity and stockpiling
• 108 million pounds to support businesses
• 138 million pounds for a public communications campaign

Hardline Brexiteers frequently accused Javid's predecessor, Philip Hammond, of preventing the government from sufficiently preparing for a no-deal Brexit because of his opposition to that outcome -- even though 4.2 billion pounds were allocated for that scenario on his watch.

The main opposition Labour Party accused the government of squandering money, while the Liberal Democrats called the expenditure a “drop in the ocean” compared with previous Treasury estimates that the U.K. economy would suffer at least a 90 billion-pound hit if it leaves the EU without an agreement.

“This is an appalling waste of tax-payers' cash, all for the sake of Boris Johnson's drive towards a totally avoidable no-deal,” Labour's Shadow Chancellor, John McDonnell, said in an emailed statement. “This government could have ruled out no deal, and spent these billions on our schools, hospitals, and people.”

To contact the reporters on this story: Jessica Shankleman in London at jshankleman@bloomberg.net;Alex Morales in London at amorales2@bloomberg.net

To contact the editors responsible for this story: Tim Ross at tross54@bloomberg.net, Thomas Penny

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