Brussels starts to freeze Britain out of EU contracts

Brussels is starting systematically to shut out British groups from multibillion-euro contracts and urging companies to decamp to one of the 27 remaining EU members as it prepares for Brexit.

In an internal memo seen by the Financial Times, top European Commission officials have told staff to avoid “unnecessary additional complications” with Britain before 2019, highlighting an administrative chill that is biting even before Britain leaves the bloc.

It explicitly calls on EU staff to begin encouraging the UK-based private sector to prepare for the “legal repercussions” of Brexit and consider the need “to have an office in the EU” to maintain their operating permits.

A week after Theresa May, the UK prime minister, triggered formal Article 50 exit talks last month, the commission note outlines how Britain will in practice immediately lose out on money and influence, even though it retains the legal rights and obligations of formal membership.

Apart from the legal requirement for a contracting party to be established in the EU, there may be political or practical reasons in favour of contracting parties established in a specific member state Where legally possible, the commission and its agencies will be expected in all activities to “take account” of the fact that Britain may be “a third country” within two years, including in appointing staff and in awarding billions of euros of direct contracts for research projects or services.

EU officials say there will be no freeze on EU spending through structural or regional funds, as these are implemented via UK authorities rather than directly through an EU body.

But in other direct funding areas the tighter approach is beginning to pinch. Brussels has already stipulated that any contracts in the latest phase of work on the €10bn Galileo satellite navigation system can be cancelled without penalty if the supplier is no longer based in an EU member state.

The commission note was circulated to senior staff and signed by Alexander Italianer, the commission’s secretary-general; Martin Selmayr, the president’s chief of staff; and Michel Barnier, the EU’s Brexit negotiator.

Source: Financial Times

Junior Trader Stefan Panteleev

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