European Union’s chief Brexit negotiator gave the U.K. a stark warning about the serious consequences it would face if it fails to agree to divorce terms with the bloc.
Speaking days before the U.K. is due to trigger its formal exit notification from the bloc, Michel Barnier on Wednesday warned Britain’s government that the U.K. would be “gravely affected” if there was no deal at the end of the two-year negotiation window.
“We have to call a spade a spade, there won’t be any business as usual,” Mr. Barnier said. “This is not a minor event. It’s a serious and exceptional situation.”
He said that in the case of no deal, British businesses would face significant supply-chain problems, the reintroduction of customs controls that could gum up British ports and there would be major challenges for seamless air travel to and from the U.K.
Even the supply of nuclear material to the U.K. would be at risk because the U.K. would be left outside of the EU’s nuclear-research and safety agreement, he said.
“This scenario of a nonagreement, of ‘no deal’, is not ours. We want a deal. We want to succeed,” Mr. Barnier told an assembly of regional and local EU politicians in Brussels.
Prime Minister Theresa May said in a keynote speech on Brexit in January that while the British government also hopes for a Brexit agreement, “no deal is better than a bad deal.” On Monday, she said she plans to trigger Brexit negotiations on March 29.
Mr. Barnier said divorce talks initially would focus on settling the rights of EU citizens in the U.K. and British citizens in the EU, something he said would take at least several months.
The two sides would also need to settle early on the issue of Britain’s Brexit bill — what the U.K. must pay in the future to meet its past legal commitments to the EU budget and other programs.
EU officials have put that figure at around EUR55 billion to EUR60 billion ($59.4 billion to $64.8 billion).
“When a country leaves the Union, there is no punishment. There is no price to pay to leave. But we must settle the accounts. We will not ask the British to pay a single euro for something they have not agreed to as a member,” Mr. Barnier said.
A third priority will be issues around Northern Ireland to avoid the restoration of a hard border with major customs controls between the U.K. territory and the rest of Ireland.
“That is why we will be particularly attentive, in these negotiations, to the consequences of the U.K.’s decision to leave the customs union, and to anything that may, in one way or another, weaken dialogue and peace,” he said.
The French official said these issues around the U.K.’s exit from the bloc would need to be addressed first. Only then could the U.K. and the EU start discussing their future trade and economic relationship.
“The quicker we reach agreement on the principles of an orderly exit, the sooner we will be able to prepare our future relationship,” he said.
U.K. ministers have repeatedly said there is no reason the EU and the U.K. can’t use the two-year negotiation window to set the divorce terms and pave the way for a future trade agreement. Other EU officials have said it would likely take the two sides years to negotiate and ratify a future trade pact.
EU leaders, excluding Mrs. May, will meet in Brussels on April 29 to set the guidelines for the talks. That will set out what issues should be included in the Brexit talks and in what kind of order.
The EU must then agree to a detailed negotiating mandate for Mr. Barnier, meaning substantive discussions between the U.K. and the EU would likely start only in May or June.
On Tuesday, Mr. Barnier said a future free-trade agreement would form the centerpiece of the future EU-U.K. relationship.
However, he also said he hopes there will be close cooperation in areas including climate change, counterterrorism and defense.
However, he warned the British government it shouldn’t use its major contribution to Europe’s defense capabilities as a bargaining chip in the Brexit talks.
“In the negotiations, security can’t be traded off against economic and commercial interests,” the former French foreign minister said.
As a new relationship will take years to negotiate, Mr. Barnier said several transitional arrangements may be necessary, which will be limited in time and won’t open a backdoor to U.K. access to parts of the single market.