(paywall) Exclusive: EU tells Britain it’s living in ‘fantasy land’ over hopes for a ‘basic’ Brexit deal
http://www.telegraph.co.uk/news/2017/11/04/britain-living-fantasy-land-hopes-basic-brexit-senior-eu-officials/
Three separate EU sources in both Brussels and a leading EU capital have warned that British expectations of a “no deal, deal”
had failed to understand the ramifications of the UK pulling out Europe without paying its bills.
The tough European line raises serious question about the value of assurances given by David Davis to the Lords this week
that Europe would do a “basic” deal with Britain in the event that both sides were unable to negotiate a trade deal.
The Brexit secretary told the Lords EU select committee that
in the “very, very improbable” event that a deal proved beyond the two sides, worst-case scenarios would be averted.
“Whatever happens we will have a basic deal without the bits we really want,”
he said < nope >
However European officials are adamant that if the UK exits the EU without a deal
– leaving an immediate €20bn black hole in the EU’s seven-year budget framework –
there will be no appetite to engineer a soft landing for the UK
“This is pure fantasy,”
said a senior EU diplomat closely involved in the Brexit negotiations,
“the idea of a ‘no deal deal’ completely fails to understand the EU, or the fury that would result if the British leave without paying their bills.
“At that point, the EU wouldn’t be looking to make a parachute for the UK,
it will only be working out how to cut strings.”
A second Brussels-based source was equally clear.
“If things go really sour the 27 will be in no mood to try to collate a number of last-minute mini emergency deals for ‘free’.
We’ll be busy enough trying to sort out the budget fallout.”
The emphasis on the EU’s annual budget
– to which the UK contributes some €10bn a year –
begs the question of whether Theresa May would be prepared to pay for the “basic” Brexit deal envisaged by Mr Davis.
Mrs May has so far pledged that the UK will pay its dues in 2019 and 2020 in order to secure a transition and future trade deal,
but Whitehall sources indicated it was from certain that the UK would pay that amount to secure a “basic” Brexit that included no trade deal at all.
It is equally uncertain that the EU, which is demanding €60bn to settle what it says are Britain’s past liabilities from EU membership,
would accept €20bn for a “basic” Brexit that enable the UK to escape the worst consequences of a no-deal departure.
The EU’s current budget cycle runs up until 2020,
leaving two unpaid years by the UK in the event of ‘crash out’ Brexit,
making €20bn the key number that would keep the remaining EU member states from having to re-open the budget.
The warnings from Europe also cast doubt over the scenario-planning at the Department for Exiting the European Union
which Whitehall sources have told The Sunday Telegraph are based on the idea of both a “managed” and an “unmanaged” no-deal.
....
In the “unmanaged” scenario, recently described as a “bad-tempered” Brexit by Chancellor Philip Hammond,
the UK would crash out of the EU with no deal whatsoever, causing significant initial disruption over trade, aviation, data-sharing.
EU sources said that in such an eventuality,
only a deal to secure the rights of EU citizens stranded on either side of the Channel
– perhaps based initially on unilateral pledges from the EU and the British government –
would be likely.
However, given the scale of likely chaos, the UK therefore envisages a “managed” no-deal scenario, 
in which the government believes it would strike a number of quick deals to mitigate the worst impacts of leaving without a trade deal
These would be based on using ‘Mutual Recognition Agreements’ to keep trade flowing,
as well as separate deals to keep planes flying
and data flowing,
according to Whitehall sources with knowledge of the UK plans.
Questions over the practicality of this second ‘no deal’ scenario have stoked disagreement between DexEU and the Treasury
over how long it would take to stand up such deals – if they were offered.
The treasury has argued preparations would need to begin as soon as March next year,
if it became politically apparent that a deal with Brussels was impossible,
while DexEU believes the Brexit brinkmanship could run up until October before seeking a ‘managed’ crash out.
< so they are playing chicken. That often ends disastrously >
EU sources warned that any “no deal” scenario that took place outside the Article 50 framework
– which can be ratified by a majority of EU states –
would also force the UK to ratify those “quick” deals through the EU’s 38 national and regional parliaments.
“Even the simplest the aviation deal, for example, could not be drafted overnight,”
the Brussels source warned.
“And even if it could be,
the political environment surrounding a breakdown in talks would hardly be conducive to rapid ratification by EU parliaments.”