Brexit Pt.2: So, When Are We Leaving The EU?
We are now just under 10 weeks away from 23:00 on 29th March 2019; the time at which the UK is scheduled to leave the European Union. So, we must know broadly what will have changed by the time we reach our desks at 09:00 on 1st April? Frankly at the current rate of Government defeats in Parliament, in-fighting within both the governing and opposition parties and increasing pressure being applied by the representatives of the individual countries forming the UK, the first half of this Article may have changed by the time the final word is written.
The Prime Minister and her team of negotiators agreed “the Deal” with the EU, which, among its many provisions, provided for an implementation period until the end of 2020. In a broad sense, the purpose of this was to adopt a ‘business as usual’ approach, with EU Law continuing to apply to the UK. In essence, until the end of 2020, the Deal limited the impact of leaving the EU, with individuals and businesses having this period to prepare for whatever climate is agreed upon between the UK and the EU for 2021 onwards. As to what that climate would be, the Deal did not clarify this. It did include the (to some) politically-controversial ‘backstop’ which would have kept the UK in a modified customs union with the EU and Northern Ireland subject to certain single market rules until such time as an agreement regarding a future trade arrangement between the UK and the EU could be agreed.
So, there’s the answer to the question this Article poses right?
The short answer is “no”. The long answer is “no”.
The Deal required the approval of the UK Parliament. If you followed the news coverage on 15th January, you will be aware not only of the defeat that the Deal had when voted on by Parliament, but also of the scale of defeat. It was voted down by a majority of 230, with only 202 MPs voting in favour of the Deal. To give that some perspective, the Conservative Party has 317 current Members of Parliament alone. The Deal failed to win even two-thirds of the vote of the Members of the Party proposing it. It represented the first Parliamentary defeat of a treaty in the UK since 1864.
So, where does that leave us?
Nearing the end of a two year process, the only certainty appears to be that a divided House, representing a divided nation, are (perhaps unsurprisingly) finding it difficult to be able to reach a consensus. The Government is currently engaging in a period of cross-party communication with a view to reaching an agreed upon ‘Plan B’, which will be voted upon in the House on 29th January. The current view of political commentators appears to be that the Plan B that the Government is going to propose is going to essentially be a further vote on the Deal, hoping that the EU are able to provide necessary assurances regarding the backstop. Given that the House has had nearly two years in which to reach an agreed consensus, it is reasonable to suggest that this short period may not bear fruit. This is assuming that the Government is able to survive any further votes of confidence in the interim! It is probably not controversial to suggest that the process is in a state of disarray.
As a result, we have to advise that the prospect of a ‘no-deal Brexit’ is a very real possibility, given that this is the default position from 23:00 on 29th March under the legislation adopted if there is no alternative deal reached. No-deal means no implementation period. No armbands to get used to the water. It’s a case of sink or swim.
The Government has been periodically producing Technical Notices that provide guidance to businesses of the steps that it will be taking in the event of a no-deal scenario. All businesses should take the time to read these and make the necessary contingency plans regarding how a no-deal would affect future processes.
So, it’s definitely 29th March either way, right?
We are not, and do not purport to be, political commentators. But it is hard to ignore that there are loud calls in the event of any Plan B proposed being unsuccessful, for an agreed extension to Article 50 to be sought from the EU and a subsequent general election in the UK, whereupon the opposition would seek to preside over a Government seeking a different deal. There also remains a vocal percentage of both the electorate and the House that strive for a second referendum regarding the UK’s future membership or otherwise of the EU. Indeed, there appear to be statements by Cabinet Ministers that a “Brexit paralysis ultimately leading to no-Brexit” is more likely than a “no-deal” in the event that the Deal is rejected. Others argue that a failure to deliver on the referendum vote (in whatever form) would be a betrayal of the British public. Whatever the outcome, it’s safe to say that gambling on one over another would be a very risky strategy.
So, what does all this mean?
The primary blight to any business is uncertainty. Yet somehow, a political system that champions business, has created an environment in which all outcomes appear possible, just 10 weeks away from the date which has been known for nearly two years.
It is therefore in the hands of businesses to create their own form of certainty. Businesses cannot risk sitting still and therefore, ensuring that your contracts are set up to minimise risk in each potential scenario to prevent this is the most sensible approach to adopt.
We can help to ensure that your template documents are updated to minimise future risk, your existing contracts are negotiated and varied to create Brexit specific provisions and that your existing negotiations are streamlined to provide each party with clarity as to how the relationship would function as a result of each potential scenario. Complacency at a time in which the UK Parliament is at (arguably) its most divided and most distrusted in over half a century is a risk your business cannot afford to take.
We will also be running specific Brexit seminars in the coming weeks to help provide you with further guidance as the political landscape unfolds.
If you are interested in attending a Brexit seminar or if you would like assistance with undertaking a Brexit Contract Audit or creating a tailored Brexit Variation Agreement, please get in touch by calling us on 01603 339044 or emailing firstname.lastname@example.org.
Please note: the content of this article is for general information only and does not constitute legal advice. Specific legal advice should be taken in each individual circumstance.