8 ways Brexit will affect businesses

The implications of Brexit are far-reaching. Our sector specialists can help you understand how Brexit will affect your organisation.

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Wider marketplace and commercial issues Many businesses are already experiencing changes in the labour market and currency effects. Cost and availability of certain supplies/ goods may change substantially.
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Compliance with future tariff and trade requirements Importers and exporters may need to have measures in place to comply with additional administration and to pay additional tariffs.
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Period of regulatory and legal uncertainty New UK regulations are likely to replace EU law and bring into effect future trade arrangements. Legal uncertainty is likely while these changes bed in up to 2021 and beyond.
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Staff and employment requirements may change EU citizens working in the UK and UK citizens working abroad may face additional requirements for work, residence and travel.
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Supply chain issues Supply chains may be affected by tariff and country of origin requirements. Where goods contain constituents from multiple sources, identification of country of origin rules may change.
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Changes in sources of funding EU funding is likely to cease. Funding (and administrative requirements in relation to it) for certain sectors may change.
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Border issues Businesses dealing with or dependent upon cross-border transit may face additional hurdles.
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Issues around brand names and designs Rights holders will need to apply for separate UK trade mark/ designs as well as EU rights once the UK has exited the EU. The coverage of existing rights will change.

 

Brexit timeline: key dates

  • 23 June 2016
    EU Referendum

    The people of Britain voted for a Brexit from the EU.

  • 29 March 2017
    Article 50 notice

    The formal withdrawal process is initiated by a notification from the UK Government to the European Council.

  • June 2017
    Brexit negotiations start

    The EU commences negotiations with the UK on the terms of the withdrawal agreement.

  • December 2017
    Negotiators agree on main withdrawal terms

    Negotiators reach agreement on main withdrawal agreement terms representing sufficient progress to allow negoitations of future UK/EU relationship.

  • Early 2018
    EU future relationship negotiations start

    The EU and UK will initially negotiate the basis for their future relationship at exit date including, potentially, a transition period. Subsequently a trade agreement might be negotiated.

  • Autumn 2018
    Target negotiations date

    In order to allow time for any agreements to be ratified by the other EU member states, the UK will seek to reach agreement on the withdrawal agreement and future partnership/trade arrangements.

  • March 2019
    Exit date

    EU treaties cease to apply to the UK from the earlier of (i) the date of entry into force of the withdrawal agreement and (ii) two years from the date of the Article 50 notice (unless two year period extended in accordance with Article 50). This is likely to be 29 March 2019.

    Any required changes to treaties or international agreements to be ratified by the remaining member states.

  • 2 years from exit
    Potential transition period for EU/UK relationship to continue largely on current terms (if agreed) and period of modification of UK law

    Under current proposals, UK government ministers will have powers to make new law (without approval of parliament) to give effect to the withdrawal agreement and to fill any gaps left by the disapplication of EU law.

Brexit FAQs

When will Brexit happen?

The UK is expected to exit the EU on 29 March 2019. Realistically, any withdrawal agreement and future UK/EU relationship agreement must be reached by Autumn/Winter 2018 if it is to come into effect before the UK leaves.

What is being negotiated?

The UK government and the EU are negotiating a withdrawal agreement and from early 2018 a future relationships agreement. In future they will also (potentially) negotiate a future trade agreement.

Key issues agreed by the negotiators in December 2017 to be included in the withdrawal agreement include the following:

1. The future Ireland/Northern Ireland settlement including border arrangements
  • The UK will respect its commitments under the Good Friday Agreement including its commitment to avoiding a hard border.
  • The UK will respect NI’s position as an integral part of the UK including the UK’s internal market when UK leaves the EU customs union and internal market.
  • The objective is to reach a further cooperation deal on the Irish Border. However where no ultimate deal can be reached the UK will maintain full alignment with regulatory rules which support North-South cooperation, the all-island economy and the Good Friday Agreement.
  • UK/Ireland agreements can be reached to allow free travel across the border for individuals (the Common Travel Area).
2. The future arrangements for EU citizens in the UK and UK citizens in the EU
  • The objective should be to provide reciprocal protection for EU and UK citizens to enable the effective exercise of rights based on past life choices (e.g. to live or work in other countries).
  • Entitlement to rights (being EU citizens’ rights) will be assessed at leaving date.
  • Citizens legally residing in UK/EU (and those living/working across a frontier) will continue to be permitted to do so.
  • Family members will have rights to join such citizens.
  • Applications for settled status will be smooth and streamlined.
  • Those with permanent residence will not be charged for applications for settled status.
  • EU Social security coordination will continue for such citizens.
  • Citizens’ rights will be enshrined in primary legislation in the UK, will be directly enforceable before the UK courts and the UK courts will have due regard to the CJEU decision on citizens’ rights.
  • The UK will set up an independent body to monitor the implementation and application of these rights under the agreement.
3. The size of the final financial payment to be made by the UK to the EU
  • A methodology has been agreed to calculate the UK’s ongoing contributions to and return of funds from the EU.
  • The UK will continue to contribute to the EU for 2019/20 as if it was a member state.
  • The UK will remain liable for its share of the EU’s contingent liabilities at the leaving date.
  • There are specific provisions for the EIB, ECB, refugee facility and European Development Fund.
  • Space assets are excluded and will be part of a separate deal.

Brexit without a deal: how will Brexit affect trade?

The terms of exit being negotiated between the UK government and the EU should include whether any transition period will have effect for certain goods/ services or supplies.

Subsequently a future relationship and potentially a trade deal may be negotiated either before exit or in the period after exit.

If no UK/EU future relationship agreement (including any transition agreement) is reached at exit date, the UK may be able to trade with the EU nations on World Trade Organisation terms. The impact would vary substantially across different sectors. Agricultural and automotive sectors may face particular challenges.

Tariffs for goods imported and exported would increase costs and may cause administrative obstacles to trade.

There may be obstacles to supplying services to EU businesses/individuals including prohibitions in some circumstances.

The movement and employment of individuals may become more difficult.

Some current (non-EU) world trade agreements may fall away. Trading with non-EU countries may change to involve additional tariffs and other obstacles.

The UK may be able to negotiate bespoke trade agreements with certain nations.  It is not formally allowed to begin such negotiations until after exit date.

How will Brexit affect the UK economy?

Brexit is already affecting the UK economy. Withdrawing from the EU will affect businesses and sectors of the economy in different ways.

The UK may cease to be involved in certain EU institutions and schemes (including funding schemes). Funding in certain sectors may need to be obtained from Westminster or devolved administrations (rather than EU).

What are the legal implications of Brexit?

EU law will be disapplied from exit date. Substantial new UK regulation may be introduced to replace it (over a period to 2021 or beyond). Court judgments may be required to clarify the effect of such changes.

The UK government, UK parliament and the devolved administrations face the challenge of disentangling the UK regulatory framework from EU law, while balancing the need to maintain a robust legal and regulatory system.

The disapplication of EU law is being implemented by a Government ‘Withdrawal Bill.’ This has passed its initial stages in the Commons, however includes some contentious provisions relating to the extent of powers being granted to ministers to introduce new law without first obtaining parliamentary approval. It is likely that the terms of the Bill will be heavily debated and may change prior to introduction in the first half of 2018.

The process for restructuring UK law includes the following:

  • Repeal of the European Communities Act (ECA). The ECA gives direct effect to all EU law in the UK and provides for the supremacy of EU law where it conflicts with UK law. Repealing this Act separates UK and EU law from a domestic perspective.
  • Transform applicable EU law into UK law. It is likely that this will need to substitute any EU institutions playing a role in the administration of such EU law with competent UK institutions.
  • End the jurisdiction of the European Court of Justice in the UK. Once the court is no longer available as a point of reference for EU law the UK courts will have to decide whether to give any note to decisions it has made in the past or future decisions when considering matters which derive (or derived) from EU law. On current proposals, there are some areas where the CJEU will continue to have a direct or indirect influence over rights (particularly of EU citizens in the UK) for a period of time after exit day.

How can Burges Salmon help?

The legal and commercial implications of Brexit are potentially very far-reaching. We are issuing sector specific guidance which we will continue to review and develop as more detail becomes available on the approach being taken to withdrawal negotiations by the EU and UK and the impact on the UK economy.

We’ve already prepared briefings in areas as diverse as employment law, intellectual property, food and farming and transport which should help inform the decisions you’re making for your business.

If you would like further information on how Brexit may affect you or your organisation then please get in touch.

Key contact

Chris Seaton

Chris Seaton Senior Partner

  • Senior Partner
  • Employment
  • Partnerships

Food and drink trade after Brexit

Brexit and UK employment law

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