Law and the financial sector; two areas of business where you usually feel an air of confidence and certainty. But in a post-Brexit Britain, have these two sectors been shaken up to have significant impact on your business? This article will look at how Brexit has already started to impact business pre-Article 50 and how the financial and legal sectors could bring further change in the not too distant future.
As Theresa May headed to Ireland this week to stress assurance to leading politicians that Irish borders and customs will not be compromised by the UK’s decision to Brexit, TGG looks at post-Brexit Britain one month on…
On Thursday 23rd June 2016, the UK voted to leave the European Union by referendum. Since this decision was made, and the general fallout that followed, TGG has been bringing you a series of blogs that look at the impact of this decision in a variety of ways. There is no question surrounding the scale of the impact of Brexit; it’s huge and affects quite literally everything, it is generation defining. So, one month on, what does Brexit mean for your business?
Grant Thornton’s International Business Report pre-vote revealed that a measly 15% of British business leaders felt that they were ‘well informed’ about the impact of Brexit on business, specifically their business. The remaining 39% felt uniformed and 46% felt ‘somewhat’ informed. The IBR showed that 46% of business leaders were concerned about the short-term implications of Brexit, 36% wanted to understand more about how this affects imports and exports of goods and services, and 35% were unsure about tax implications. So, post-Brexit are we filled with any more certainty? The short answer would be: no. It is this uncertainty that caused the pound to crash; uncertainty scares people.
Despite her strong ‘Brexit means Brexit’ stance, it has been heard by the high court that Theresa May will not invoke Article 50 in 2016. But even though the UK hasn’t officially exited the EU, and possibly won’t do until the end of 2018, we have already sampled a taste of what life outside the EU will be like for business. The pound weakened immediately after the referendum result was announced and, though unfavourable for many businesses, it means UK Trade now has it’s time to shine – as we explored in a previous blog.
What we can gauge from Brexit is that Britain’s relationship with the EU will have to come to some sort of status quo if Britain’s businesses want to be kept happy. Britain’s financial sector will almost certainly benefit by following in the footsteps of Norway and entering EEA membership. However that is unlikely to be politically pleasing, so Britain may have to forge its own EU relationship agreements when it comes to business such as the financial sector; after all, some might argue that staying in the single market whilst obliging to most EU laws and free movement isn’t really full-Brexit. Joining the EFTA, like Switzerland, could also be seen as a move that isn’t really full-Brexit. However, both of these moves keep a close relationship with EU trade and financial agreements, though many bi-lateral agreements need to be constantly made, regulated, and reshaped for this to remain an amicable deal. An in depth look at all the viable post-Brexit trade models can be found here.
The legal sector is also an interesting study post-Brexit, and its impact on business. UK and EU law have been intertwined for forty-three years now. Therefore, if Theresa May wants to keep UK Law consistent, she will need her government to turn much of EU law into UK law. This covers numerous jurisdictions, from product patenting, EU health and safety, to employment law, and intellectual property. And though this may seem like a simple solution, creating one body of law is highly complicated by the advanced administrations of Scotland, Wales, and Northern Ireland, which means that, essentially, there would need to be four UK law replacements for every one EU law; a mammoth, perhaps near impossible, undertaking. Law holds obvious implications for UK business, an in depth assessment of which you can read here, but I am going to look at an example of how your business could potentially be affected by the changes to intellectual property.
Much like it is stated above, intellectual property laws will have to be turned into UK law to avoid any gaps in jurisdiction. It is clear that companies seeking European patents will struggle post-Brexit and under the unitary patent system, which Britain will now not be a part of. This also means that although Britain is still part of the older, slower EPC patent system, EU member states may view the UK as in irritant when trying to obtain pan-European patent protection. It is also a worry that the UK will no longer be operating in the European Digital Single Market which promotes common data protection laws, gives better access with reduced costs to products and services, and increases implementation and approval of digital services (an in depth analysis can be found here).
In terms of the what implications the financial and legal sectors have on your business post-Brexit… it is still a waiting game. May’s government is under immense pressure to trigger Article 50 sooner rather than later which means the era of uncertainty could be shorter than expected. But whether we enter the EFTA, or go full-Brexit under the WTO, and whether the law undergoes a major overhaul or we hang in limbo for longer than we would like, one thing is certain, and it’s possibly the only thing Brexit has taught us thus far: expect the unexpected!