Theresa May gave a televised statement on Brexit today, following yesterday’s EU summit at which EU leaders rejected her “Chequers Proposal”.  The unexpected press statement gave raise to anticipation this would be something big. In substance it wasn’t:  she said little new that would affect business planning for Brexit. But the tone - distinctly combative towards the EU and uncompromising - was new. And this is the most significant thing - it was signalling that No Deal is now more likely and we should all be prepared for the worst.

Here are six take-outs  from the last two days - points to factor into Brexit contingency planning.

1. Whatever the Prime Minister says, her Chequers proposals are dead. Donald Tusk, the EU President, clearly stated that the EU will not accept the 'cherry picking' proposal of single market for goods but not services. In the UK there is no majority in Parliament for Chequers - Labour have said they would vote against and the ERG group of hard-Brexit Conservative MPs have said at least 40 of them would too.

This leaves three options for our future relationship with the EU: No Deal, a Free Trade Agreement akin to the EU- Canada agreement ( more limited than the chequers proposal), or membership of the EEA  (the Norway model). These are the three scenarios we have been working with our clients for scenario planning and they remain the best basis to use.

2. If you only plan for one scenario, plan for No Deal. The antagonistic tone of EU-UK negotiations this week makes this more likely than ever. Now is the time to plan for No Deal.  In the last three weeks, I have had a surge of interest from clients wanting to develop or review their Brexit contingency plans - businesses know they have to plan now and plan for the worst. 

3. Theresa May did make a firm commitment that EU citizens working in the UK would have full rights to remain in event of No Deal. Dominic Raab the Brexit Minister has said this before but this is the first time the Prime Minister has so unequivocally stated it. Employers and EU citizens in the UK should take comfort from this. Employers should use this as an opportunity to engage with EU citizens in their workforce to reassure them of their right to remain.

4. The Irish border question looks as unresolved as ever. Theresa May said the UK would bring forward fresh proposals for ensuring an open border. She accused the EU of having no new ideas:  which is odd give yesterday the Irish Taoiseach, Leo Varadkar, confirmed on that the EU was tweaking its backstop proposal: with the EU proposing that agriculture and phytosanitary checks would be the only physical controls that would need to take place between Northern Ireland and Britain’s mainland (customs declarations would be done electronically).  

It is interesting that one of Theresa May's two main commitments in her speech (the other was to EU citizens) was to the people of Northern Ireland: that the UK Government would  do nothing to create additional border controls. I think this may signal that if there is No Deal, the UK government will not impose any controls at the Irish border - leaving it to the Irish government and the EU to decide whether or not they do. This remains a significant area of uncertainty for the many supply chains and traders between Ireland, Northern Ireland, Great Britain and the rest of the EU. Food and livestock businesses can expect some form of new phytosanitary controls at some borders and everyone with distribution between Ireland and the UK should be considering 'authorised economic operator' (AEO) status as a basis for any “trusted trader” schemes for customs.

5.  After the Prime Minister's statement, the pound fell to $1.305.  Expect markets to price in further devaluation in anticipation of No Deal over the coming months.  Review your Foreign Exchange exposure (and opportunities) and hedging now.   

6. Finally, Theresa May’s refusal to compromise and her summoning of the spirit of Margaret Thatcher may be a deliberate political ploy to create more blue water between the Government and the Labour Party. On the eve of a Labour Party conference that may support a second referendum and see renewed backing for the Norwegian model, this may be a tactic to show clear dividing lines:  either to unite her divided MPs or to develop a distinct consumer offer in the event of an election. My colleague Tom and I will be following the debate at the Labour and Conservative party conferences - watch this space.