With the final and second anniversary of the UK’s Article 50 withdrawal notice (29th March 2019) fast approaching, the time for any deal other than that proposed in the November draft withdrawal agreement has effectively run out.
Article 50 obliges the EU to negotiate and conclude an agreement with the UK setting out the arrangements for withdrawal and taking account of the framework for its future relationship. Notwithstanding the Cabinet’s collective decision to approve the draft withdrawal agreement and an outline political declaration on 14th November 2018, subsequent events have only served to heighten the uncertainty. The odds of either a no deal Brexit or a delayed Brexit have both shortened and businesses which have trading relationships with the EU need to consider their contingency plans.
Until we have news of any extension to the Article 50 withdrawal notice and with no time left for ratifying any agreement, a no deal Brexit remains the current legal default position come 29th March 2019. Whilst some argue that the UK can take steps to mitigate against the worst effects of a no deal Brexit and rely on World Trade Organisation rules, that would still leave enormous uncertainty and potential disruption. The UK could not necessarily rely on the EU member states to be co-operative in treating the UK as a privileged third party over and above other non-EU members and WTO rules are nowhere near as robust as those of the EU.
Much reliance has also been placed on the draft withdrawal agreement’s proposed transition period to 31 December 2020 to assist with an orderly Brexit. This transition period would be an early victim of a no deal Brexit.
Despite the last two years the picture is very much incomplete, even with a deal, particularly as to the relationship of the UK with the EU after 2020. The UK government has ruled out any “off the shelf” models for a trade deal and is looking for an ambitious free trade agreement, based on managed regulatory divergence. The absence of any one-size-fits-all approach confirms our recommendation that it is important to look at the issues on a sectoral basis. We expect to see clarity in some issues and sectors ahead of others.
Against this background, our sector experts are working closely with clients to advise on the legal considerations of Brexit for businesses and individuals and how best to manage their operations and investments in the short term within the current regulatory framework and beyond.
In the articles below we are endeavouring to provide insight, in-depth analysis and an overview on key issues and likely implications for some of the key UK sectors by our industry experts. We will continue to provide guidance and insight when relevant.