EU officials don't relish the idea of no deal – but they are prepared to play hardball

The top EU officials working on Brexit believe that the most likely outcome is for Britain to leave without a deal at the end of October. Last Monday’s debate between Boris Johnson and Jeremy Hunt – in which both said that the withdrawal agreement’s “Irish backstop” would have to be excised altogether rather than just modified – reinforced the gloom in Brussels. EU officials do not want no deal but think they are powerless to prevent it. They see the Conservative party driving the UK towards the cliff edge and fear MPs are incapable of grabbing the steering wheel to avert disaster.

For many months EU officials have thought that Johnson, the likely next prime minister, had only two options: either to “put lipstick on the pig” and dress up Theresa May’s deal to make it prettier, with extra protocols and interpretations; or to seek a fundamental change such as insisting on a time limit for the Irish backstop. The EU would have been happy to collaborate over the first option, but Johnson has now explicitly ruled that out. He has even rejected a time limit on the backstop.

Some of those in Johnson’s entourage expect that, faced with a resolute UK, the EU will blink – to prevent damage to its trade. However, key policymakers in Brussels and EU capitals regard such thinking as deluded. They are not relaxed about no deal but they are resigned. They have passed laws to protect their interests, for example on road haulage, aviation and financial clearing houses. They have reconstructed ports and hired extra staff. They believe they can take no deal on the chin.

Some Johnsonites respond that the Irish would take a huge economic hit from no deal and that they will therefore press the EU to abandon the backstop. But that is to misread Irish politics. Leo Varadkar, the taoiseach who leads a minority Fine Gael government, would pay a high political price for caving in to pressure from London. Many Conservatives fail to see that, just as they would happily accept a smaller GDP in order to regain British sovereignty, many in the Irish Republic would rather lose some income than abandon the backstop and thus endanger the peace process by restoring a hard border with Northern Ireland.

True, no deal would require Dublin to place controls on the border with Northern Ireland, but Varadkar could blame the British. In any case the Irish and the other 26 do not expect no deal to last for long: they think the chaos in the UK would prompt its government to request talks. The EU would only agree if the British paid what it regards as its money, safeguarded citizens’ rights and accepted something like the Irish backstop.

None of this means the EU is happy about the prospect of no deal. The strategic consequences could be even worse than the economic costs, according to a senior diplomat in one of the more influential member states. “An acrimonious Brexit would weaken Europe vis-a-vis the US and China,” he said. “And it could accentuate divisions between the EU’s western and eastern countries – the British helped to bind the easterners into the club.”

Some Brussels officials still hope and believe that Johnson may prove capable of fickleness and flexibility, and that he will in the end pursue option one. After all, he could find it hard to win an election if he crashes the economy by leaving without a deal. Officials have considered how they could modify May’s package and their ideas include:

• A new political declaration on the future relationship, spelling out the kind of Canada-style free trade agreement that Johnson has praised. But then the UK would leave the customs union and the single market, which would mean checks on the Irish border, unless there was something like the backstop;

• Embellishing the commitments the EU made in the “joint interpretive instrument” of March, designed to reassure the UK that the backstop would not be permanent. For example, the EU could accept a timetable for examining whether particular parts of the backstop needed to stay;

• The withdrawal agreement itself could be amended to give the UK a longer transition. Then Johnson could claim the backstop would not be needed: the UK would have, say, five years to negotiate a trade deal and fix the Irish border issues. But that would mean an extended period of “vassalage” – with the UK subject to EU rules while having no vote on them;

• Another amendment could make the backstop cover just Northern Ireland rather than the whole UK. Then Great Britain, outside the EU’s customs union, would be free to run its own trade policy. But that would require customs checks between Great Britain and Northern Ireland – which would be anathema to the Democratic Unionist party.

But even if Johnson liked these ideas, would they convince MPs to vote for a modified deal? Many EU officials are doubtful, which makes them wonder whether a renegotiation is worth the effort.

The more optimistic among them hope that the UK will soon face a general election and that a new government emerges, committed to preventing no deal. What if a new prime minister asks for another extension of article 50? Despite everyone being extremely fed up with the British, the EU is likely to agree – so long as the prime minister has a clear plan for resolving Brexit.

Charles Grant is director of the Centre for European Reform.