In this report, we explain some of the key legal implications associated with the United Kingdom leaving the European Union (EU) without a deal for future relations being agreed between themselves. This note assumes that, in the event of no agreement being reached, the UK and EU will trade on the basis of World Trade Organisation (WTO) rules. Any reference to “no deal” in this report should be understood as being a reference to trading on WTO rules in place of a formal deal between the EU and the United Kingdom. This note aims to provide clients with a degree of reassurance amidst the prevailing uncertainty that the prospect of a “no deal” Brexit brings. The topics covered include (i) banking and financial services, (ii) tax, (iii) contracts and enforceability of judgements, (iv) employment law, (v) data protection and (vi) health care regulation.
Many businesses remain hopeful that either a form of transitional agreement governing temporary relations between the United Kingdom and EU (Withdrawal Agreement) will have been agreed and ratified by the time the United Kingdom leaves the EU at the end of the extension recently agreed between the EU and the United Kingdom beyond the original designated departure date of March 29 2019 (such extension being referred to in this report as Brexit day) or, failing that, that the Article 50 process will be revoked before Brexit day. The current draft Withdrawal Agreement negotiated between the UK Government and the EU has already been rejected twice by a historic majority of UK MPs in two sets of parliamentary votes, mainly due to concerns over a backstop plan to avoid a hard border between Ireland and Northern Ireland. A third parliamentary vote will not be possible unless a new, substantially different Withdrawal Agreement is put forward. Meanwhile, the European Council has agreed to extend the UK’s departure date to 22 May 2019 as long as the current draft Withdrawal Agreement is approved by the UK Parliament during the week commencing 25 March. Should Parliament reject the Withdrawal Agreement for a third time (which seems likely), the European Council will allow the departure date to be delayed until April 12 2019 and expects the UK to indicate a way forward for consideration by the European Council before then.
On the face of it, this extension should give the UK more time to consider its options. However, a “no deal” Brexit is still possible. In addition, the opposition Labour Party has introduced the possibility of a second referendum or “People’s Vote” into the mix, a decision largely prompted by a group of MPs splitting off from the two main political parties and forming a new temporary alliance (known as the Independent Group) in protest at the Brexit negotiation process. With the political situation changing daily, and with Brexit Day getting closer, the need to prepare for a “no-deal” Brexit has become increasingly important.
Given the political and macroeconomic uncertainty created by this situation, businesses will need to prepare for a “no deal” scenario regardless of the actual outcome. That said, while it is important to be mindful of the challenges associated with a “no deal” Brexit, the opportunities should not be overlooked. In this vein, we hope that this report will encourage clients to plan effectively and to make informed decisions for their businesses based on a balanced and objective set of criteria, rather than fear of the unknown.