Brexit – what happens next?

Brexit – what happens next?

The UK’s vote to leave the EU is set to herald major changes to business, economic and political life – but where does it leave you? Colin Hewitt, head of commercial at law firm Ward Hadaway, takes a practical look at the situation.

It would not be an exaggeration to say that the result of the EU Referendum on 23 June resulted in a seismic economic shock for the UK and arguably for world markets.
However, now that the initial shock has worn off, what will the vote mean in practice for companies and business people and how is it likely to affect business activity?

Currently, pinning down definite consequences of the UK’s planned withdrawal is not straightforward: we have at least two years of negotiations to come and so many outcomes remain uncertain. Nonetheless, this article looks to answer some important questions and provide some practical steps for businesses to help deal with Brexit.

Do EU laws still apply in the UK?
Some EU law has effect in the UK because it has been incorporated into UK legislation. These laws will not be affected by Brexit unless specific action is taken to change or repeal them. Until the UK formally leaves the EU, all EU regulations and directives having direct effect will also remain in force in the UK. Many such EU laws which are not encapsulated within UK legislation will have to be adopted or replaced upon Brexit. Many laws are interrelated and so changes may be complex to fully implement.

Will the UK still be able to trade with EU countries after leaving the EU?
The basis on which the UK and Europe will trade post-Brexit is likely to be at the heart of the negotiations following the triggering of Article 50 and the outcome will be of crucial importance to businesses and the UK economy.

Future trading with the EU may follow one of a number of existing models or may result in a new bespoke model. The existing options provide different levels of access to EU markets and differing levels of compliance with EU regulations – some, for instance, incorporate freedom of movement and contributions to the EU budget.

However, as a general point, whichever model is adopted, UK companies exporting goods and services into the EU will have to comply with the EU requirements applying to those goods and services - without the UK having had a say in setting those requirements.

What about trading with non-EU countries?
Under some of the possible EU trading models, the UK would benefit from some existing free trade agreements whilst under others with fewer ties to the EU, the UK would be free to conclude its own free trade agreements. However, such agreements invariably take time to conclude. It took Greenland six years from its referendum to finally leave the EU and conclude its own treaty whilst the EU’s trade deal with Canada took just over five years
to negotiate and is not yet fully ratified.

What should businesses be doing now?
1. Businesses should start considering now how their relationships with suppliers and customers might be impacted by Brexit, for example by restrictions on access to the single market, or through the kind of currency volatility we have already seen.
2. Businesses should also review their current contracts to assess the impact of Brexit. Standard contracts should also be revised to ensure that they include suitable clauses to deal with post-Brexit issues such as export controls and additional time and costs.
3. Employers should monitor their workforce in terms of where they work and should immediately assess the immigration status of non-UK workers and plan for ensuring how to retain necessary skills.
4. Employment is an area where EU regulations have had considerable impact within the UK and employers should continually review their employment contracts and policies pending Brexit to ensure that they comply with any changes to employment legislation.

Ward Hadaway has published a special Brexit guide on our website at www.wardhadaway.compromotionsbrexit-guide which is regularly updated with practical tips and developments on Brexit. Our team of experts are also ready to help.