Brexit For Dummies book cover

Brexit For Dummies

By: Nicholas Wallwork Published: 07-11-2019

Your practical and fearless guide to surviving the world’s biggest break-up 

Whether you’re a staunch Remainer, a buccaneering Brexiteer, or are wavering between the two camps, you’ll want to be fully au fait with all the issues surrounding Britain’s exit from the EU—wherever in the world you and your business are based. This book, by leading businessman and entrepreneur Nicholas Wallwork, will arm you with everything you need to negotiate the post-Brexit landscape and end up just where you need to be. 

Kicking off with the history behind the tightly fought June 23 referendum, Brexit for Dummies covers the origins of British Euroscepticism right up to the most recent legal and policy changes in place following the vote. As well as looking at the influence Brexit has already had—both domestically and internationally—the book takes a glimpse at what lies ahead, giving you vital insights into how to protect your business right now and to capitalize on new opportunities in the future.

  • Changing customs: how to negotiate the new import-export rules
  • Think global: how is Brexit influencing the international economy?
  • Get moving: what do immigration policy changes mean for my business?
  • Buy or sell?: make the smartest foreign investment decisions both inside and outside Britain

Love it or loathe it, Brexit has profound implications for your business, and this guide will help you stop worrying and prove that au revoir doesn’t mean goodbye for good.

Articles From Brexit For Dummies

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Brexit For Dummies Cheat Sheet

Cheat Sheet / Updated 03-10-2022

Making sense of Brexit can feel like a full-time job. Find out what Brexit is and why it happened, how it impacts the economy, and what happens if the United Kingdom decides to rejoin the European Union in the future.

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9 Business Ideas for a Post-Brexit World

Article / Updated 09-23-2019

So much of the news around Brexit, and particularly the impact of Brexit on business, has been, well, not exactly cheerful. (Some would say downright doom and gloom, while others might say hysterical.) And although there are obviously issues to be aware of and prepare for, but plenty of businesses are finding positive opportunities in the face of Brexit. This article looks at just a few of the potential opportunities that businesses in the United Kingdom (UK) could exploit as a result of Brexit. Some of these are short-term opportunities, while others may take longer to pay off. And some will be more applicable to your company than others. These are not one-size-fits-all solutions here. It’s up to you to pick and choose the ideas that may deliver the most value for your business. Pick one or two ideas that you think best apply to your business, taking into account the size of your company, your capabilities, where your business is in its life cycle, and the wider industry in which you operate. Having cherry-picked the most applicable opportunities, you can then investigate them further. Brexit will open up new markets beyond the EU If you’re already exporting goods outside the UK, or you’re eager to explore overseas markets, Brexit could deliver a welcome boost. Or, more specifically, the devalued pound resulting from Brexit uncertainty could help to boost your export sales. A weaker pound tends to help companies that export goods overseas, because it makes UK products cheaper than those produced in countries with stronger currencies. For a reverse illustration of this, consider imports of cheap Chinese steel. Even though the product is coming all the way from China, it may still be cheaper than British steel, because it costs a Chinese steel producer less to manufacturer than it costs a British company. The UK’s ability to negotiate trade deals with other countries is far from crystal clear at the moment. So, to fully understand the impact on your exports, stay tuned to future trade negotiations. Brexit will increase domestic demand for products and services What’s the flip side of cheaper UK exports being more attractive to overseas buyers? Imports from outside the UK become more expensive for UK businesses and consumers. Of course, if you’re importing parts or products from abroad, this will cause you some headaches in terms of profitability, in which case, you may be looking to trade more with UK partners. But, on the positive side, rising import prices can bring big benefits. When foreign products become more expensive (perhaps because of currency fluctuations or trade tariffs), consumers tend to look closer to home for goods and services. In other words, your business may be more competitive than foreign companies. Brexit will lead to reduced regulation On the whole, the UK is likely to remain fairly closely aligned with European Union (EU) rules. Yet, in some areas, it’s possible that post-Brexit changes to regulations and standards may offer UK businesses greater freedom and flexibility than EU rules. Reduced regulation may make your business processes easier and quicker, and potentially reduce your costs — all of which could make your business more competitive. Help solve your customers’ Brexit-related problems If you’ve struggled to comprehend the implications of Brexit for your business, it’s fair to assume that some or all of your customers (and potential customers) may find themselves in the same boat. Consider whether there’s a market opportunity to offer tailored Brexit services to your customers. Ask yourself, “What are our customers struggling with in relation to Brexit, and how can we help them to solve those problems?” Now, this doesn’t mean you should set up a new business as an all-singing-all-dancing Brexit consultancy service (although, for those who have the skills and knowledge, such a business would probably prove quite valuable in the short term). Instead, this means Tailoring your products and services in line with your customers’ Brexit “pain points.” These pain points could be around access to labor, VAT, cash flow, stockpiling goods, seeking investment, or whatever. Tweaking your marketing messages to emphasize how your business is ready to help clients overcome Brexit hurdles. For example, if you’re an accountant primarily dealing with small and midsize firms, your clients may need extra support to understand potential VAT changes — in which case, you’re there to guide them through changes and help them implement new processes. Or, if you run a legal firm dealing with employment law, you’re well placed to help local businesses that employ workers from outside the UK stay on the right side of the law. If you’re a business coach or adviser, your clients may be looking to explore new growth strategies for their company or revise their business strategy in light of Brexit developments. This strategy is a relatively short-term one, but you may find it pays long-term dividends. By positioning your business as more prepared and more thoughtful than your competitors, you have the opportunity to gain market share and raise your company’s profile. Brexit could be your chance to build a personal reputation as a leader in your industry In addition to raising the profile of your business, Brexit may also present a tantalizing career opportunity for you. Where possible, collaborate with others outside your own organization to discuss Brexit implications, stay in the loop on the industry’s response, and strengthen your personal network. Here are just a few ways you could potentially increase your personal profile within your industry in light of Brexit: Engage on a broader scale outside your business by joining Brexit committees set up by your trade association or other organizations in your field. If the government asks for participation and consultation in your area of expertise, consider getting involved. Publish online articles and white papers setting out how your company is dealing with Brexit implications and staying ahead of the field. If you work in a large organization, you could volunteer to represent the company on industry committees and working groups, or present updates to the company’s leadership team on how your department is managing Brexit implications. Brexit may create opportunities for business process automation Rising automation is a huge topic in business, thanks largely to massive leaps in technology, robotics, artificial intelligence and so on. If your company hasn’t already looked at the potential to automate processes and roles, now is a good time to start. Looking at automation opportunities is a bit like renewing your car insurance. We all know we shouldn’t just stick with the status quo and accept the renewal price from our current insurer; we know that if we spent half a day calling around dozens of insurers, we could get a better deal elsewhere. Yet, when renewal time comes around, how many of us take the easy route and stick with the status quo? Come on, you’re among friends, be honest. Think of exploring automation as being forced to renew your car insurance the “proper” way. Sticking with the status quo isn’t an option, not unless you’ve really done your homework and you’re sure there isn’t a better alternative out there. Automation may be particularly relevant if your business is reliant on labor from overseas to fulfill critical business functions. If attracting British workers isn’t a realistic option (some industries do struggle to recruit locally and have to look farther afield), then automating certain processes may be an unavoidable long-term strategy for your business. You may think automation only applies in manufacturing or agricultural contexts, but think again. A wide range of business processes are increasingly being automated, across all sorts of business functions, including HR, sales, marketing, and finance. For example, in sales, software can now automate lead prioritization, scheduling appointments, and logging follow-up tasks. Automation doesn’t necessarily mean taking jobs away from human workers and giving them to machines. In a lot of cases, automation simply improves what human employees do by helping to streamline processes. And when your human employees are freed up from more menial, repetitive tasks (such as scheduling appointments), they have more time to focus on tasks that directly benefit the business. Therefore, use Brexit as an excuse to review your processes across the business and see where you have an opportunity to automate and improve processes. If you’re a big believer in work–life balance and the passive income mind-set, you should be constantly reviewing processes in your businesses to see what can be done quicker, cheaper, and easier with software or well-designed systems. Brexit could lead to investment from overseas investors There’s a definite sense that overseas investors have been holding back from investing in UK real estate development projects in light of Brexit uncertainty. In other words, there’s potentially a massive backlog of external investment just waiting to pile into the UK property market after the dust settles, especially because the pound is weak and investments represent better value and yield. There are indications of a wider downturn in foreign investment. Figures from the Organisation for Economic Co-operation and Development (OECD) show that foreign investment fell 90 percent in 2017, after a bumper 2016. That’s obviously concerning in the short term, but the long-term picture is more positive, with many believing that foreign investment will flood back into the country after Brexit. Why would overseas investors want to invest in UK businesses and projects? Quite simply, because the weak pound means their money goes further in the UK. They get more bang for their buck (or euros, or whatever) and the UK fundamentally remains an excellent investment location. So, when the short-term uncertainty is over, external investment will likely pick up the pace. Investment promotion agencies may be able to help your business attract foreign investors. (InvestUK is one example of such an agency.) You can also get help and advice from the Department for International Trade. Brexit could be the opportunity you need to pick up business from companies that have left the UK In the event that a direct competitor pulls out of the UK, consider whether there’s a chance to suck up some of their business. This could, for example, involve buying their client lists (where possible), advertising to their primary audience, or even acquiring the UK arm of an EU company. Take the UK fishing industry as a big-picture example. If EU countries lose the right to fish in British waters after Brexit, this could give UK fleets a much fairer share of fishing rights. (In 2018, EU fleets were landing eight times as much fish in UK waters as British fleets were landing in EU waters.) Whether you’re a fisherman or a financial adviser, if your competitors leave a gap to be filled, make sure your business is the one that fills it. Be ready to expand your market share and attract new customers. Brexit may cause homegrown support for British businesses Many in the UK see Brexit as an opportunity to become more self-sufficient, to prioritize homegrown solutions over imported products and services. (In the case of the agricultural sector, the word homegrown is highly relevant because imported food potentially becomes more expensive.) This isn’t just about Brexit, though. For all sorts of reasons, including climate change, more and more people are thinking “local” rather than “global.” Local producers, local suppliers, local services — all offer an opportunity for customers, clients, and consumers to feel more connected to the companies they deal with. People in the UK want to support UK businesses. If you’re a local alternative to faceless, global entities, don’t be afraid to say so!

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The Brexit Vote: Key Elements Behind the Withdrawal Negotiations

Article / Updated 09-23-2019

The Brexit vote has created uncertainty. Many are speculating as to what relations will look like in a post-Brexit world. To get a better handle on what to expect, let’s take a look at the key elements behind the Brexit vote. The withdrawal negotiations between the UK and the EU seemed to go on forever, but really they’re just the tip of the iceberg. That’s because the withdrawal agreement only covers the UK’s departure from the EU. It doesn’t agree on critical elements of the future relationship between the two, such as trade. The withdrawal agreement is purely about getting the UK out of the EU in an orderly manner. Trade negotiations — and agreements that cover cooperation in areas like security and defense — will not begin until after the UK has left the EU. This was a big area of misunderstanding for a lot of people, who assumed the “Brexit deal” was essentially a trade deal. So, what does this orderly exit involve? To ensure the UK’s exit would be as smooth as possible, the two sides negotiated the following key points as part of the withdrawal agreement: The divorce bill, or how much the UK has to pay to cover its existing commitments to the EU. The transition period (also known as implementation period), which is designed to ensure a controlled transfer, and give governments and businesses time to prepare for life after Brexit. The rights of EU citizens already living in the UK (and the rights of UK citizens living in the EU) to retain their residency status after Brexit. Also, that the free movement of people would continue until the end of the transition period. Theresa May had made it clear during negotiations that free movement of people would have to end after the transition period — it was one of her “red lines” that she refused to budge on. The fact that the UK will have to abide by EU laws for the duration of the transition period — something that raised a lot of eyebrows among Brexiteers. How to avoid a hard border between Northern Ireland and the Republic of Ireland. The withdrawal agreement includes a provision for a temporary customs union between the UK and the EU until a trade deal is agreed upon, and this is known as the This backstop measure proved extremely unpopular among Brexiteers (and even many Remainers), even though it was designed to prevent a hard border and protect peace on the island of Ireland. The UK’s ongoing relationship with the EU in areas such as trade is not part of the withdrawal deal because none of that has been negotiated yet. The political declaration sets out a vague aim to agree on a trading relationship that’s as close as possible, but it avoids any specific details. Deal or no deal? The Brexit deal goes down to the wire Although the EU27 leaders signed off on the withdrawal agreement and political declaration, Theresa May had her hands full trying to get approval from the UK Parliament. The original Brexit vote, which was scheduled for December 2018, was postponed at the last minute when it became obvious that almost no one in Parliament was prepared to support the deal. The Irish backstop was the main objection for most people, amidst concerns that it could inadvertently trap the UK in a permanent customs union with the EU — without the option to withdraw from that customs union in the future. The Brexit vote eventually took place in January 2019, at which point the UK Parliament spectacularly rejected (by a record majority) the Brexit deal that May and her team had spent almost 18 months negotiating. But, like a fading Hollywood franchise that refuses to die, Theresa May brought the withdrawal deal back for a second vote, and a third, both in March 2019. Both times, Parliament rejected the Brexit deal. With just a couple of weeks to go until the intended exit date, the UK was on the verge of crashing out of the EU with no approved deal, meaning no transition period and potential chaos for UK businesses. The EU looked on open-mouthed as chaotic scenes unfolded in Parliament. Meanwhile, the British public (and their Parliament) split further into factions: Some wanted to leave the EU with no deal, some wanted to delay Brexit and start negotiations again, some called for Brexit to be canceled altogether (a prospect that the EU had paved the way for when it agreed that the UK could just revoke Article 50 without getting the EU’s agreement), and many called for a second EU referendum. At this point, MPs voted to wrestle control of the Brexit process from Theresa May and her government, meaning they could begin to debate their own ideas on how to get Brexit done. Unfortunately, this didn’t work out either — it became glaringly obvious that there was no consensus on how best to leave the EU. All sorts of options were proposed: Leave the single market but remain in the customs union, leave the customs union but remain in the single market, have a second referendum on whatever deal is agreed upon, have a nice cup of tea and watch Killing Eve. (Okay, the last one is made up, but you get the idea — it seemed everyone had a different idea on how best to proceed.) All options were rejected. So, they voted on Brexit again. And all options were rejected again. As one British newspaper put it at the time, MPs took back control of the Brexit process, only to discover that they didn’t know what it was they wanted. Amidst all the confusion, the EU took matters into its own hands and decided to extend Article 50 until April 12, 2019 — an extension of two weeks to help get something, anything, through Parliament. This short extension wasn’t enough, though, and the EU and the UK then agreed on another extension, pushing the Brexit date back to October 31, 2019. If this painful process proved anything (beyond the UK’s incredible talent for comedy), it’s that Brexit means different things to different people. Remember that the referendum was a simple in/out vote. People were asked, should the UK remain in the EU or leave? Those who voted leave weren’t voting for a particular type of Brexit on the ballot sheet; they were just voting to leave. Therefore, some of those who voted out undoubtedly had a hard Brexit in mind, while others will have leaned more toward a softer Brexit and maintaining close ties with Europe. Therefore, when politicians talk about Brexit being “the will of the people,” what they’re really doing is interpreting their own version of the Brexit referendum result in line with their political position on Europe. As such, “the will of the people” has been used as an argument for a no-deal Brexit by hardliner Conservatives. Meanwhile, the opposition Labour Party, has interpreted the “will of the people” as meaning a softer Brexit.

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9 Ways to Protect Your Business against Brexit Uncertainty

Article / Updated 09-23-2019

Brexit, market shifts, global financial crises, advancing technology — businesses have always had to cope with uncertainty and change in one way or another. While Brexit presents new challenges, stay confident that this is a storm your business can weather. When the going gets tough — whether it’s temporary disruption or huge industry change — the businesses that survive (and thrive, in fact) are the ones that keep their eyes on the ball while finding ways to adapt. This article looks at practical ways to maintain a successful business in the light of Brexit, even when times are changing and uncertainty is rife. Whether you’re a small business owner, a leader in a larger company, or the manager of a team, this article helps you keep focused, stay positive, and continue to deliver great results. Do a Brexit impact assessment There’s an old saying in business: You can’t manage what you don’t measure. Sure, Peter Drucker, the management guru who coined the phrase, was talking about using key performance indicators to track progress, but I think there’s a deeper lesson to learn here. Namely, if you don’t first get the lay of the land, how on earth can you expect to steer your business or team in the right direction? If you don’t understand the potential impact of Brexit, how can you manage it? Work with a “dream team” of experts to get through Brexit A dream team comprises experts in all the fields where you lack specialized skills and knowledge. These would be professional advisers, and you should rely on them to give you the most relevant, accurate, and up-to-date advice you need to steer your businesses correctly. Brexit is a complicated, evolving subject, and you’ll undoubtedly need professional expertise to guide you in certain areas as the business climate changes. If you already have that expertise in house, great! Consider, though, whether your in-house dream team could benefit from upskilling and training to ensure they have all the right knowledge and tools at this time. If you don’t have the people in house, it’s never too late to start expanding your network and connecting with expert, external services. This may involve: Connecting with specialists via your local networking groups Seeking word-of-mouth recommendations from people you know and trust Connecting with experts online via LinkedIn and specialist forums You could, of course, spend an awful lot of your own time keeping up with nitty-gritty Brexit developments, researching legal implications, deciphering potential tax changes, and all that jazz — but is that really the best approach for your business or the best use of your time? Probably not. That’s what your professional advisers are for. Besides, it’s not a great idea to rely on your own reading of the Brexit situation. If you misread new rules, for instance, it could end up costing your business dearly in the long term. Seek professional advice and make sure your business gets it right the first time. Stay in the loop on Brexit developments Remember when you were advised not to get too embroiled in the latest, nitty-gritty Brexit developments? (Of course you do, it was only a couple of paragraphs ago.) To be clear, this isn’t permission to ignore Brexit developments altogether, or bury your head in the sand. Sticking your fingers in your ears and singing “la la la” — tempting though it may be sometimes — isn’t much of a strategy. Bottom line: You do still need to stay in the loop on the latest big-picture Brexit news. Even if the latest development isn’t what you, personally, wanted to see happen. Even if you’re exhausted by the subject (as many people are). If you don’t stay up to date at a basic level, how will you know what questions to ask your dream team of expert advisers? Engage with government support and business resources for Brexit Many business owners, leaders, and managers are in the same boat as you — trying to pick their way through an extremely complicated subject and unearth the practical implications for their business. You’re not alone, in other words. Recognizing this need for clear information, the government and lots of independent organizations are offering support for businesses. The Confederation of British Industry is one great example of this. Keep your foot on the gas to get through Brexit Change usually affects a company in one of two ways: It spurs the business on to evolve and adapt. In this scenario, change is a force for good, something that encourages innovation, positivity, and excitement. It sucks the energy and motivation from a business. People get distracted by temporary uncertainty. Engagement dips. Negativity rises. Everyday business activity suffers. Which camp do you want your business to be in? Don’t let your business get distracted by Brexit-related uncertainty (or any business uncertainty, for that matter). Don’t get bogged down or take your foot off the gas. Stay focused on your core activities at this time — “core activities” means continuing to deliver outstanding products, and wowing your customers or clients with incredible service. Isn’t that why you started the business in the first place? (Or, if you’re an employee, isn’t that why you get out of bed and go to work each day?) If you let that everyday activity slip, if you don’t stay true to your business’s mission, even if it’s just for a little while, your customers will notice. Don’t give them an excuse to take their business elsewhere. Diversify and create multiple streams of income to survive Brexit During uncertain times, keeping your business doing what it does best is vital. There’s a counterpoint to that important rule: While maintaining your core everyday business activity, you may also want to take this opportunity to consider diversifying your business and finding new sources of revenue. Any business that’s reliant on one market, one big customer, one major supplier, or one single product is vulnerable. Over-reliance on one thing is risky at any time, but especially so in uncertain times — and especially when it comes to revenue. That’s why, wherever possible, you should look for ways to grow your business through new revenue streams. This may mean Developing new products and services Expanding into new geographic regions Targeting new customer segments Partnering with or acquiring another provider who brings something new and exciting to the party Expanding your professional network After the United Kingdom (UK) has exited the European Union (EU) — assuming the UK exits under the terms of a withdrawal agreement — there’s then a formal transition period that’s likely to run until December 2020, but could run until December 2022, or later, depending on when the UK leaves. Think of this transition period as your innovation and diversification period. In other words, you’ve got X many months to a) think about where your company is going and how best to evolve and future-proof the business, and b) put those plans into action. Turn Brexit into an opportunity — that’s the message! Small businesses are at a big advantage here, because they can usually innovate, adapt, and respond to market changes quicker than huge multinational corporations, with their many layers of leadership and approval processes. If you’re a small business, find a way to take advantage of the market conditions. Don’t be afraid to experiment. Find out what works and what doesn’t for your business, keep pushing and always be growing. Working with a business adviser is a great way to identify and assess new business opportunities and find ways to grow your business. Look for a local business adviser or consultant wherever possible (perhaps through local networking groups or word-of-mouth recommendations). A local adviser can really get to know your business in depth, and the two of you can develop that important face-to-face rapport. Also, review your marketing efforts and don’t join the masses and cut marketing spend through fear. Try this mantra: Observe the masses and do the opposite, and you won’t go wrong. While your competition panics and loses market share through inaction, you can take this opportunity to get ahead! Keep staff engaged and motivated to get your business through Brexit Some of your employees may be EU citizens unsure of their rights in the UK after Brexit. These employees will obviously need clear information and support from your business. But whether your employees hail from Spain, South America, or Southend-on-Sea, Brexit uncertainty has the potential to cause unease among the workforce. People may have big fears about the business as a whole or, on a smaller scale, be worried about certain processes or their roles changing. Few things kill off staff engagement and motivation faster than uncertainty, so make sure to manage this carefully. For the most part, this is about communicating openly and clearly with staff on how the business will be impacted (if at all), where there may be changes, and how those changes will be managed. In other words, reassure your employees that you’re on top of the situation, and that there’s a plan (or that a plan is being developed, which is better than nothing). Above all, remind your employees of the business’s mission and goals at this time, and the need for everyone to keep doing what they’re doing — delivering awesome products and delighting customers with amazing service. If you aren’t already monitoring employee engagement on a regular basis, now may be a good time to start. Gone are the days of expensive, time-consuming annual staff surveys; these days, there are tons of inexpensive tools that can assess employee mood frequently, using just a few well-chosen questions. Communicate with your customers about Brexit Just as you should be communicating openly with your employees during uncertain times, you also need to be communicating openly with your customers and suppliers (more on suppliers coming up next). Your customers will need to know whether anything is likely to change after the UK is no longer part of the EU. For example, are overseas orders likely to take a few days longer? Are prices changing? Are you offering new products and services? In short, keep communicating with your customers, and reassure them that it’s business as usual in terms of your company delivering outstanding customer service. Make sure your customer communications don’t fall foul of General Data Protection Regulation (GDPR) rules. Communicate with your suppliers about Brexit The impact of the Brexit referendum on your supply chain will depend on what type of business you run and the suppliers you work with. But, whatever the impact (if any), it’s vital you maintain a clear line of communication with your suppliers. Are your suppliers keeping you up to date on any potential service changes or delays? If not, press them for more information and ask them for more regular updates. After all, you’ve got to keep your own customers informed. There may be times when the picture is a little foggy. A supplier may, for example, know that a particular process will change, but not yet have 100 percent certainty on how it will change. That’s understandable. What you need is transparent communication on what’s definitely happening, where there may be gray areas, and a timeline for resolving any unknowns. If both parties can maintain that open line of communication, you’ll be well placed to weather uncertainty together and emerge with a stronger, closer business relationship.

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Keeping an Eye on Brexit News: 10 Brexit Developments to Watch

Article / Updated 09-20-2019

Brexit is a complicated subject that’s constantly evolving. Some issues are simply unresolved or unclear as the road to Brexit is being paved; others, such as trade, are subject to ongoing negotiations. Brexit is a bit like playing whack-a-mole in that sense — one uncertainty gets resolved or one hurdle is cleared (whack!), and another one pops up immediately to take its place. Therefore, you can’t really consider the job of “understanding” Brexit and its implications done anytime soon. Even after the United Kingdom (UK) has left the European Union (EU), it may take years to fully realize some of the effects or implement certain legal and policy changes. That means you need to stay in the loop on the latest Brexit developments if you want to steer your business correctly. The transition period after Brexit The Brexit withdrawal deal allows for a transition period, where certain things, like trade arrangements and the UK abiding by EU rules, will continue unchanged until December 2020, or whenever the transition period is set to end. This transition period could potentially be extended until as late as December 2022 (perhaps even later), if the UK and the EU agree. If the transition period is extended, this will impact the Brexit timeline, because UK companies will still be bound by EU rules for the duration. This is either a good thing or a bad thing, depending on which side of the Brexit fence you fall. Those in favor of extending the transition period say it’ll give the UK more time to negotiate a trade deal with the EU. Most experts agree that December 2020 doesn’t give nearly enough time to negotiate a trade deal. (As an example, Canada’s trade agreement with the EU took seven years!) Meanwhile, those against an extension are unhappy at the idea of being hitched to the EU for any longer than necessary. They’d much rather take a “rip off the Band-Aid “ approach. Trade negotiations with the EU and beyond in a post-Brexit world It’s not yet clear how the UK will trade with Europe and the rest of the world after it leaves the EU. What sort of barriers will there be to moving goods across borders? What tariffs will apply? The answer, for now, is anyone’s guess. Here are some of the options that have been proposed for the UK’s future trade relationship with the EU: A Norway-style deal, which would see the UK remain in the single market but leave the customs union. Upside? The UK would have full access to the single market with no barriers. Downside? The UK would have to accept freedom of movement and be subject to EU regulations (without having a say in setting those regulations, as EU members do). A Turkey-style deal, in which the UK would leave the single market but remain in a customs union with the EU. Upside? Likely tariff-free trade between the UK and the EU. Downside? The UK would have to apply the EU’s common external tariff on goods from non-EU countries, which might hamper the UK’s trade negotiations with other countries. A Canada- or Switzerland-style deal, whereby the UK leaves the single market and customs union but negotiates a tailor-made free trade agreement with the EU. This is the route Switzerland and Canada have taken. Upside? Likely tariff-free trade. Downside? The UK may have to comply with EU law and/or accept free movement of people, like Switzerland does. Trading under World Trade Organization (WTO) rules, in which the UK would leave the single market and customs union, and trade with the EU under WTO rules. Upside? No expectations of free movement of people or the UK having to apply common EU tariffs on non-EU goods. Downsides? Tariffs and customs formalities would come into force on UK–EU trade, there’d be no preferential access to EU markets, and trade would be far from frictionless. It’s worth noting that no major country trades with the EU solely on WTO terms. What about trading with countries outside the EU after Brexit, after Brittain is no longer covered by the EU’s trade deals with those countries? For one thing, any new non-EU trade deals won’t come into force until after the transition period has ended (Brittain can negotiate and sign deals with countries during the transition period, but those deals won’t apply until after the transition period). Critics of Brexit have noted that negotiating new trade deals with other countries may mean the UK is forced to accept goods that don’t meet our current standards. Food safety and animal welfare are oft-quoted examples, particularly the famous “chlorine chicken.” (The United States uses chemical washes, including chlorine, in some production processes — a practice that’s banned in the EU.) Many UK consumers aren’t exactly licking their lips at the thought of eating chlorinated chicken. And some UK businesses are understandably worried about competition from overseas producers that aren’t subject to the same high standards as they are. Meanwhile, many Brexit supporters point to the Commonwealth as a bright prospect in the UK’s future trade relationships, which makes sense given the close bond the UK has with its Commonwealth partners. Yet, some of the same quality concerns may apply (for example, Australian beef is treated with hormones that are currently banned in the EU), and the EU is, for now, a much bigger export customer for UK businesses than the Commonwealth is. All in all, expect trade negotiations to have more twists and turns than Game of Thrones! It’ll certainly be interesting to see how all this plays out over the next few years. The Irish backstop issue There are several issues surrounding the potential “hard border” between Northern Ireland and the Republic of Ireland. As a result, the Irish border and backstop as a key issue to keep an eye on. Developments in this area will be especially relevant to companies in Northern Ireland and Ireland, because any hard border would impact integration and trade between the two countries. But even companies in England, Scotland, and Wales will need to stay informed, because goods moving between Northern Ireland and the rest of the UK may be subject to additional checks. Scottish independence In 2014, Scotland held a referendum to decide whether Scotland should leave the UK and become an independent country. After what was a record turnout for a UK election, the result was a pretty confident “no,” with 55.3 percent of voters opting to remain part of the UK. Then the UK as a whole voted to leave the EU in 2016, even though Scottish voters were overwhelmingly in favor of staying in the EU. In March 2017, Scottish First Minister Nicola Sturgeon formally announced she would seek approval for a second Scottish referendum. The Scottish government approved this request, but the UK government chose not to respond. In fact, at the time of writing, the UK government still hadn’t formally responded. It’s probably on someone’s to-do list somewhere. . . . Those in favor of a second referendum argue that the UK leaving the EU constitutes a material change of circumstances. Those who are against a second referendum argue that Brexit is being used to push the agendas of pro-independence politicians. Whether calls for a second referendum get louder or quietly disappear remains to be seen. But if there is a second referendum, and Scotland chooses independence, will Wales follow suit? And what will it mean for those in favor of unification between Ireland and Northern Ireland? Repatriation of UK/EU laws after Brexit to Westminster and devolved parliaments Assuming the UK exits the EU with a withdrawal agreement, the UK plans to keep EU laws during the transition period. Quite how much the UK will be able to change its laws after that isn’t yet clear — much will depend on the international agreements Britain makes with the EU and potentially other trade partners. Even if the UK ultimately decided to repeal and completely change all inherited EU laws (which is unlikely — just think of all the paperwork involved!), UK businesses wanting to trade in the EU would likely still have to comply broadly with certain EU laws. But one thing is clear: having withdrawn from the EU, the UK (and not Brussels) will be responsible for setting its own laws. But where in the UK will those laws be made? After all, Scotland, Wales, and Northern Ireland have their own devolved parliaments. Devolution means that the UK’s constituent countries have their own independent governments and parliaments. Each can set its own policies in certain areas, including health, education and agriculture. (Crucially, this doesn’t apply to all policies, though. Things like benefits, immigration, and foreign policy remain under the overall control of Westminster. In other words, Wales can’t take a different foreign policy stance than England.) So, when the UK “takes back control of its laws,” where does that control go to? In the first instance, all powers will come back to Westminster, and some will be devolved from there. But, to avoid disruption to the UK’s own internal market, Westminster will want to see a UK-wide approach taken on certain areas (which may include devolved matters like agriculture and fishing). In other words, whether Brexit leads to greater devolution of power (as some in the Scottish Vote Leave camp had speculated) or ends up restricting certain powers remains to be seen. Will companies pull out of the UK after Brexit? In February 2019, it was reported that the Netherlands was talking to 250 companies about switching their operations from the UK to the Netherlands, and the Dutch government boasted that it had already tempted more than 40 businesses or branch offices away from the UK. High-profile companies that have already confirmed they’re ditching the UK in favor of the Netherlands include Sony and Panasonic. But the Netherlands isn’t the only European country trying to poach businesses. Other countries including Ireland, France, and Germany have also been trying to capitalize on Brexit and lure UK-based companies to their shores. Whether your company is better off in Amsterdam or Aberdeen is something only you can answer. But assuming you’re opting to stay put, be aware of trends within your industry pulling businesses out of the UK and into the EU. Their leaving could provide an opportunity to increase your market share and grab some of their customers. The changing political landscape in Britain with Brexit Many commentators felt that the popularity of the UK Independence Party (UKIP) wasn’t just about a desire to pull out of the EU, but also a desire to give the middle finger to the mainstream establishment — a system that’s seen British politics dominated (for the most part, at least) by two parties for centuries. The same could be said of Donald Trump being elected president in the United States — many voters responded positively to the fact that he wasn’t a politician. Many would love to say things have improved since the Brexit vote, that voters feel better having gotten their dislike of politicians off their chests. But that’s not the sense that most experts get. Thanks to all the political wrangling behind the withdrawal deal process, many in the UK find themselves rolling their eyes at shenanigans in Westminster. The inability of both main parties to find common ground and work together to create the best outcome disgusts many of the people I talk to. Plenty, on both sides of the Brexit debate, feel that politicians just aren’t acting in the interests of the country. Add to this the divisions within both the Labour and Conservative parties, and you have a whole lot of uncertainty and turmoil. So perhaps it was no surprise that, in February 2019, seven Labour Members of Parliament (MPs) quit the party to form their own breakaway, pro-EU Independent Group (later renamed Change UK), joined soon after by three Conservative MPs. And at the other end of the Brexit scale, Nigel Farage formed a new anti-EU party, the Brexit Party, in April 2019. Will our wider political landscape change quite dramatically over the next few years? It’ll be very interesting to see what happens at the next general election (scheduled for May 2022, but it could happen much sooner) — an election that may still be dominated by the Brexit fallout, whether we like it or not. And, of course, if the ruling party changes, that will mean a change in policies, which will further affect businesses. . . . Workforce pressures affecting the public and private sectors Across the public and private sectors, there has been a lot of speculation about how Brexit will affect access to labor. This will be a key ongoing issue for many UK businesses. The National Health Service (NHS) alone has around 63,000 employees from the EU, which accounts for 5 percent of the total NHS workforce. In the private sector, care homes and farming are also heavily reliant on overseas labor. Make sure your dream team of expert advisers includes an employment law specialist who can help you understand implications and navigate policy changes. Brexit’s impact on currency and financial markets Worldwide currencies and stock markets are more volatile in times of political and economic uncertainty. The pound has certainly had a bouncy couple of years since the Brexit vote. If your business is sensitive to currency exchange fluctuations (for example, if you import and export goods), talk to your accountant and financial adviser to see whether there are ways to limit your exposure. But it’s not just the value of the pound that fluctuates. Stock markets and property markets are typically volatile when there’s political and economic uncertainty. This volatility affects businesses in all sorts of ways, such as: The value of businesses floated on the stock exchange tumbles. Foreign investors are more likely to hold back investment. Pension pots suffer. News outlets like the Financial Times are invaluable for business leaders at times like this, but you can also find useful insights on financial forums such as Citywire Funds Insider or Bull Market Board. Helpful Brexit resources to help you keep up to date In addition to your regular news source, you may also want to regularly check the latest Brexit information from the following resources: Department for Exiting the European Union: Known by the snappy acronym DExEU, this is the government department responsible for overseeing Brexit negotiations. Confederation of British Industry: Representing 190,000 businesses across the UK, the CBI has a thorough handle on what Brexit means for companies. British Chambers of Commerce: The BCC has lots of practical advice for companies and thoughtful analyses of Brexit developments. The Federation of Small Businesses: FSB is a great resource for small businesses and people who are self-employed. Trade associations: If your company is a member of a trade association, be sure to regularly check its latest Brexit guidance and advice.

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GDPR and Brexit: Managing the Personal Data of EU Citizens

Article / Updated 09-20-2019

Brexit has spawned lots of questions surrounding the GDPR. Unless you’ve been living under a rock for the past couple of years, you’ll have read and heard a lot about the impact of the EU General Data Protection Regulation (GDPR), which came into force on May 25, 2018. But with GDPR being an EU regulation, will UK businesses still have to comply with GDPR rules after Brexit? The short answer is yes, businesses in the UK will still have to comply with GDPR rules even after Brexit. But, in some cases, the specifics of how your company handles data may change slightly after Brexit. Recognizing that GDPR is enshrined in UK law and Brexit won’t change that In a nutshell, GDPR is designed to give every EU citizen greater control over his or her personal data, including name, date of birth, and email address. It ensures that companies can’t store and use the personal data of EU citizens without their explicit consent, and promotes the fair, transparent use of personal data. The fact that UK citizens will no longer be EU citizens after Brexit doesn’t matter. Implementation of GDPR in the UK is covered by the UK Parliament’s Data Protection Act 2018. So, GDPR is already written into UK law, and the government has committed to maintaining GDPR compliance in the UK. This ensures that UK citizens will continue to get all the same protections as their EU neighbors, when it comes to the fair use of their data. This means all the protocols you’ve put in place to lawfully handle the data of your customers (whether they’re in Europe or the UK) will still apply, and you should absolutely maintain compliance with GDPR. But why continue with something that originated as EU law when so much of the rhetoric surrounding Brexit was about “taking back control”? The cynical answer is that businesses and public bodies in the UK have already spent millions ensuring their data practices were fully compliant with GDPR. If the government backtracked on GDPR now, it would mean all that expenditure was pointless. After all the time, effort, and money spent, it would be crazy to “undo” GDPR in the UK. The less cynical answer is that GDPR is a good thing, for organizations and for individuals. Sure, it brings additional burdens in terms of compliance, but there’s no doubt it provides important protections for citizens’ private data. As technology advances and the world becomes increasingly driven by data, these protections will only become more valuable. It’s also important to remember that any close relationship between the UK and the EU going forward is likely to be dependent upon both parties having similar regulatory systems. Therefore, GDPR is just one area where British businesses will effectively be operating in line with European businesses. Transferring data between the UK and the EU after Brexit Broadly speaking, how UK businesses handle personal data will stay the same. But there’s a big uncertainty around what happens to businesses that transfer data between the UK and the remaining EU27 countries after Brexit (for example, if a company has offices in the UK and Europe, or if a UK business uses a cloud service provider based in the EU). Under GDPR, data cannot be transferred between the EU and third countries (non-EU countries) unless those countries have been deemed to have “adequate” data protections in place. In the less likely event of a no-deal Brexit, the UK will immediately be considered a third country, which means that the European Commission will need to assess that the UK has adequate levels of protection in order for the smooth transfer of data to continue. (In theory, the Data Protection Act ensures that the UK does provide an adequate level of protection, but as with so much of Brexit, it’s a case of wait and see whether this plays out in reality.) And if the UK does exit with a withdrawal agreement in place, then, for the duration of any transition period, data transfers can continue as normal. Stay up to date on the latest GDPR advice by visiting the following sites: Amendments to UK data protection law in the event the UK leaves the EU without a deal International data transfers

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Brexit and Northern Ireland: The Tricky Issue of the “Backstop”

Article / Updated 09-19-2019

Brexit has brought about a whole new treasure trove of economic and political concerns. One in particular is that concerning how Brexit will impact Norther Ireland. If you’re living in the UK, you heard a lot about Northern Ireland and the “backstop” during the Brexit negotiations. In fact, the backstop became one of the major sticking points as far as Brexit was concerned when the withdrawal agreement went before UK Parliament for approval. But what is the Irish backstop, and what does the withdrawal agreement mean for the frictionless border between the Republic of Ireland and Northern Ireland? Before you can understand that, let’s have a super-quick history lesson. The trouble of Northern Ireland and Brexit: The Good Friday Agreement Signed in 1998, the Good Friday Agreement (also known as the Belfast Agreement) helped to bring about peace on the island of Ireland and end what was known as “the Troubles,” a decades-long conflict between the Unionists/Loyalists (who wanted Northern Ireland to remain part of the UK) and the Nationalists/Republicans (who wanted Northern Ireland to join a united Ireland). There was a whole lot of religious disagreement mixed in there, too — Unionists were mostly Protestant and Nationalists were mostly Catholic. After decades of violent conflict (which spilled over into the Republic of Ireland and the island of Great Britain), the UK government, the Irish government, and various parties from Northern Ireland signed the Good Friday Agreement. (The United States also played a key role in the discussions.) This agreement created a devolved government in Northern Ireland (called the Northern Ireland Assembly), with the Unionists and Nationalists governing together in a power-sharing arrangement. It wasn’t all plain sailing from there; the Northern Ireland Assembly was suspended in 2002 for five years, and the power-sharing arrangement broke down again in January 2017, resulting in the Northern Ireland government being dissolved. In April 2019, the two main parties in Northern Ireland had yet to reach an agreement and form a new government. What’s all this Northern Ireland history got to do with Brexit? Well, a key part of the Good Friday Agreement is the complete removal of physical borders between Northern Ireland and the Republic of Ireland — as well as free movement across both countries. This is not just about making inter-island trade and travel easier; it’s also about allowing closer ties between the communities and breaking down the barriers (physical and otherwise) to peace and stability. However, this lack of border caused a major problem in the UK–EU negotiations. Why? Because no physical border between Northern Ireland (which is part of the UK) and the Republic of Ireland (which is part of the EU) means no border between the EU and a non-EU country. The UK and the EU had to find a way to overcome this hurdle, without jeopardizing peace and stability on the island of Ireland. It’s important to note that no one, including the EU, wants to see a hard border between Northern Ireland and the Republic of Ireland. No one is in favor of installing border controls. However, the EU obviously wants to protect its single market and customs union from the uncontrolled flow of goods — and it needs some form of customs control to do this. Meanwhile, the UK obviously wants to ensure that Northern Ireland isn’t isolated from the rest of the UK, and that Northern Ireland doesn’t return to conflict. Various solutions have been proposed, including a border down the middle of the Irish sea, effectively separating Northern Ireland from the rest of the UK — an idea that angered the Democratic Unionist Party in Northern Ireland, prompting Theresa May to reject the proposal. The EU also proposed that Northern Ireland become part of a “common regulatory area” with Ireland, which would mean Northern Ireland being subject to different regulations than the rest of the UK — an idea also rejected by the UK government. What the Brexit withdrawal agreement says about the Irish backstop Until it becomes evident what the UK’s future trade relationship will be with the EU, it’s impossible to find a permanent solution to this problem. The border issue will, therefore, form part of ongoing Brexit negotiations between the UK and the EU. That’s why the withdrawal agreement includes a provision for a temporary customs union between the UK and the EU until a trade deal is agreed. This provision is known as the backstop. If the UK and the EU haven’t agreed on a trade deal that avoids a hard border before the end of the transition period, then the backstop arrangement will kick in. In this way, the backstop is like an insurance policy. The Irish backstop arrangement is as follows: Until a trade deal is agreed upon, Northern Ireland will be aligned to EU rules on issues such as food and the standard of goods. This would mean there’s no need for border checks between Northern Ireland and the Republic of Ireland, because Northern Ireland would effectively be treated as part of the EU. In theory, goods flowing from the rest of the UK into Northern Ireland (and vice versa) would be subject to checks and controls. However, the backstop allows for a single customs territory (basically, a temporary customs union) between the UK and the EU, which ties the UK to EU customs and control for the duration of the backstop. As long as the Irish backstop is in force, the UK will have to comply with “level playing field conditions,” which are designed to prevent competitive advantage. For example, the UK wouldn’t be able to implement any trade deal with non-EU countries that would involve removing tariffs on goods. Neither party can unilaterally withdraw from this temporary customs union, meaning the UK can’t withdraw from the backstop without EU approval. You can imagine how those in favor of Brexit feel about this! Here’s the really big problem, though. The backstop is intended to be a temporary arrangement, with the above conditions, until a proper trade deal is agreed upon between the UK and the EU. However, if the UK and the EU can’t agree on a trade deal, then the backstop would apply indefinitely. This would tie the UK to the EU single market, and EU control, indefinitely. Having no guaranteed end to the Irish backstop is a huge concern for many people who voted to leave the EU. You can see why the border was one of the toughest parts to negotiate in the draft agreement. And when the agreement was published, and people began to fully understand what the backstop might mean, that’s when the fun really began. The backstop became one of the biggest talking points as the UK Parliament came to vote on the withdrawal deal. This issue continues to be one of concern as Brexit negotiations continue.

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What’s the Potential Impact of Brexit on Your Business?

Article / Updated 09-19-2019

Whatever happens with Brexit, whatever happens with any future trade agreement between the UK and the EU, business will continue. As with any business change, evolution or disruption, managing the impact of Brexit is bout finding ways to adapt, ride out uncertainty, and future-proof your business as much as possible. It’s difficult to know for sure what the full impact of Brexit will be — depending on the type of business and industry you’re in, your company may hardly be affected. Regardless, it’s important to plan for potential changes or disruptions so that your company isn’t caught unawares. If you were around in the late 1990s, you might remember talk of the “millennium bug.” We were all told our computers would stop working as the new millennium dawned, that public services would grind to a halt and planes would fall out of the sky. None of it came to pass. So, although it’s not a good idea to downplay very real Brexit concerns, it’s important to maintain a level head and approach Brexit as you would any period of business change, evolution, or uncertainty. Keep reading to discover the economic impact of Brexit and assess some of the key business activities that may be affected. The effects of Brexit for trading across borders If your UK business trades with customers in the EU, you may need to consider things like the following: Whatever happens, trade between the UK and the EU will continue, but it may be subject to tariffs on goods, increased paperwork, and customs checks. The processes for customs duties and value-added tax (VAT) payments on imports from the EU may also change. If the UK exits the EU with a withdrawal deal, then UK–EU trade will continue as normal for the duration of any agreed-upon transition period. During the transition period, both sides will start to negotiate a longer-term trade agreement. However, if the UK exits the EU without a withdrawal deal, or if the UK and the EU can’t come to an agreement on future trade arrangements, then the UK will trade with the EU under World Trade Organization (WTO) rules. The picture for services companies selling their services in Europe may be slightly more complicated, since the trading of services tends to rely on close regulatory compliance. So, the ability of UK service companies to easily do business in the EU will depend on what the UK and EU agree on as part of their trade negotiations. The impact of Brexit on logistics challenges Increased paperwork. Customs checks at the border. Customs payments. All of these potential developments will inevitably lead to higher costs and logistics challenges for businesses. Some of the key logistics considerations include the following: Goods may be subject to increased customs checks as they cross a UK–EU border. We may see delays at UK ports (especially at busy, high-volume crossing points like Dover), which will mean it will take longer to transport goods in and out of the UK. Warehousing is in higher demand as businesses look to stockpile goods in case of disruption. Even if the UK exits with a withdrawal agreement and swiftly secures a free-trade agreement with the EU, it’s still likely that border controls may change in one way or another. What’s more, there are still likely to be some teething problems as the UK and the EU adjust to their new relationship, so it’s wise to prepare for some level of disruption to your supply chain. The impact of Brexit on employees and access to labor Brexit will prompt a change in UK immigration rules, because one of Theresa May’s “red lines” in the negotiations was the desire to end free movement between the UK and the EU. For those businesses that employ EU nationals or are dependent on short-term labor from Europe, this could cause problems. You may need to consider things like the following: Your EU national employees will need to obtain settled status if they want to remain in the UK indefinitely after Brexit. Settled status is the name given to the government scheme that provides security for EU nationals living in the UK, allowing them to stay on indefinitely. The UK government plans to allow unskilled workers from “low-risk countries” (likely to include all of the EU) to be allowed to come and work in the UK for up to 12 months without needing a visa. However, in light of the devalued pound and uncertainty around Brexit, many European workers are choosing to earn their money elsewhere in Europe, leading some industries to voice concerns about access to labor in the future. It’s vital that you support your employees through any period of business uncertainty or disruption. Other considerations for the business impact of Brexit There are all sorts of other business considerations that don’t fall under the headings of people, logistics, and trade, but are nonetheless important for businesses. These include the following: Potential impact on EU-based subsidiaries or branches What happens to intellectual property after Brexit What happens to environmental standards, product safety standards, and other legal or regulatory requirements that your business complies with The need to take steps to retain any .eu domain names that your business has The impact of Brexit on your General Data Protection Regulation (GDPR) practices The need to review and update your business contracts A quick checklist for managing the effects of Brexit Clearly, there are lots of things to think about when it comes to preparing your business for Brexit. Here’s a checklist of items to consider as we approach Brexit: Will Brexit affect your company structure in any way? This is particularly relevant if you have overseas subsidiary businesses. Do you need to change your company registration at Companies House? Is it worth establishing formal relationships with EU-based companies to eliminate your own need to have a subsidiary business in the EU? Are there any opportunities to expand your business by acquiring subsidiaries of EU-based companies that no longer want to operate in the UK? Have you taken precautions to protect your copyright, brand names, logos, patents, and other intellectual property? Is your UK-based insurance still valid within the EU post-Brexit? Have you made plans to revise your contracts where necessary, including where they refer to EU law? How will legal disputes be resolved post-Brexit? Have you reviewed the potential regulatory changes that may impact your business? Do you need to update your internal policies and procedures? Are you in touch with your trade association for general advice? Have you signed up for government alerts on Brexit? Make sure you have a contingency plan for Brexit Contingency planning is all about making sure your business can cope with the changes or disruptions that may come your way after Brexit, whether these are short-term blips or long-term changes. You may well need expert help to prepare detailed contingency plans or assess industry-specific implications for your business. To help get your business in good shape for Brexit, check out the following tools: Business Brexit Checklist from the British Chambers of Commerce Official government tool to help businesses prepare for Brexit Looking to life after Brexit Nothing good comes from scaremongering or fueling fears that business will grind to a halt after Brexit. Quite the opposite. Brexit, like any period of change, has the potential to lead businesses to new market opportunities, fresh ways of thinking, and better ways of doing business. However you feel about Brexit, it’s not going away anytime soon. Considering future trade talks between the UK and the EU, Brexit may dominate the news for some time to come. For this reason, it’s vital that UK businesses stay focused on, well, doing business.

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What Does Brexit Mean? A Guide to Brexit Terminology

Article / Updated 09-19-2019

Brexit is a topic that’s dominated by political and economic jargon, and loaded with more acronyms than you can shake a stick at. What do all these Brexit terms mean? Read on to discover your very own guide to Brexit lingo. European Union (EU): The political and economic union that comprises 28 member states, with a total population of around 500 million. That’s including the UK, however — there will be 27 member states when the UK leaves the EU after Brexit takes place. So, when you hear people talk about the EU27, they’re referring to the remaining 27 countries of the EU, excluding the UK. The EU is built upon four key principles, or freedoms: free movement of people, goods, services, and money across all member states. Eurozone: Those members of the EU that have adopted the euro currency. Not all EU members are part of the eurozone; the UK, for example, chose not to adopt the euro, while newer EU members like Bulgaria and Romania are working toward adopting the euro. Schengen Area: An area of passport- and border-free travel within Europe. It comprises most (not all) EU countries, plus some non-EU countries, such as Switzerland. The UK did not participate in Schengen.brexit European Economic Community (EEC): In very simple terms, the precursor to the EU. Created in 1957, it aimed to bring about greater economic integration between member countries in Europe. The UK wasn’t an original member of the EEC, and it didn’t end up joining until the 1970s. When the EU was eventually formed in the 1990s (reflecting the fact that European integration was now about much more than economic cooperation), the EEC was essentially folded into the EU. Single market (or common market): The EU’s free trade area. The single market means participating countries can trade freely with each other without trade barriers (like tariffs). For this to happen, all countries in the EU single market generally follow the same rules, regulations, and standards, and accept the free movement of people, goods, services, and money. You cannot be a member of the single market without accepting free movement of people. EU customs union: Different from the single market. A customs union means all members agree to charge the same tariffs on imports from outside the union. You can be a member of the customs union (and apply the same agreed-upon tariffs as the EU) but not be part of the single market — Turkey has this arrangement with the EU. Conversely, you can be a member of the single market but not the customs union — Norway has this arrangement with the EU. European Economic Area (EEA): An agreement that allows some non-EU countries to participate in the EU single market. The EEA is made up of all the EU countries, plus three extra countries: Norway, Iceland, and Liechtenstein. European Free Trade Association (EFTA): A free-trade area comprising four countries: Iceland, Liechtenstein, Norway, and Switzerland. It ensures free trade and economic integration between members, but it also has close ties with the EU. EFTA members participate in the EU single market and Schengen, but are not part of the EU customs union. Soft Brexit: The term used for a future relationship in which the UK and EU remain closely aligned, perhaps by the UK remaining in the single market or customs union or both. Supporters of a soft Brexit argue that such a scenario would minimize disruption to businesses. Hard Brexit: The term used to signify more of a “clean break” with Europe, that would see the UK out of the EU, the single market, and the customs union — thereby leaving the UK free to negotiate its own trade deals and external tariffs with other countries. As negotiations wore on, hard Brexit also became synonymous with no-deal Brexit. Brexit deal: The Brexit withdrawal agreement, which sets out the terms for an orderly departure from the EU, including a transition period. No-deal Brexit: The UK leaving the EU without signing off on the withdrawal agreement, thereby ending free movement and participation in the single market and customs union overnight, with no transition period, which many people have argued could cause major disruption to businesses. Article 50: The clause in the EU’s constitution that sets out the path for member states to leave the EU. For the UK to formally start the process of leaving the EU (incidentally, the UK is the first independent country ever to decide to leave the EU), it had to trigger Article 50. Irish backstop: It’s complicated. But, put very simply, the backstop is an insurance policy in the withdrawal agreement that aims to avoid a hard border between Northern Ireland (which is part of the UK) and the Republic of Ireland (which is part of the EU). The backstop means the UK and the EU would remain in a customs union until a formal trade deal is agreed on by the two parties — something that could take many years. Navigating Brexit is still a bit of a slippery slope. Ultimately, the true consequences of the Brexit decision will only come to light once the UK has withdrawn from the EU.

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Key Issues in the Brexit Referendum

Article / Updated 09-19-2019

To truly understand the effects of Brexit, we need to understand the key issues that came to the fore during the Brexit referendum campaign. Many of these issues run right to the heart of Britain’s problematic relationship with the EU. Read on to discover how Brexit will impact finances, immigration, trade, and sovereignty in the United Kingdom. The financial impact of Brexit: Britain’s contributions to the EU No discussion would be complete without mentioning the financial impact of Brexit. Central to the arguments of many Eurosceptics was the belief that the UK gave the EU much more, financially speaking, than it got back in return. How much does the UK really pay in? The UK’s contribution toward the EU’s budget changes each year. But, as an example, the UK made a gross contribution of €13 billion to the EU budget in 2017. (Without the rebate, the UK’s gross contribution would have come to more than €18 billion.) In return, the UK received around €4 billion in EU spending, making its net contribution around €9 billion. Remember that famous bus from the referendum campaign with the slogan on the side claiming that the UK sends €350 million a week to the EU? That figure excluded the rebate and the money the EU gives to the UK for public projects and funding. The UK also benefits from EU membership in ways that are much, much harder to estimate, including increased flow of investment, and the ability to buy and sell products easily within the EU. But, yes, the UK does contribute more to the EU budget than it gets back. In fact, the UK is one of the biggest contributors in the EU. Much has been said about the fact that the UK contributes more to the EU budget than 26 other EU members combined. And this statistic is true. But perhaps a less emotive way to look at it is this: According to Full Fact, in 2017, the UK’s net contribution totaled 18 percent of all net contributors. From a completely neutral standpoint, it makes sense that richer countries in the EU will contribute more than the poorer members (who are net beneficiaries of EU money). But, still, it’s a hard thing to sell to voters — particularly in parts of the UK that have struggled economically. Feeling the squeeze as Brexit approaches On top of this, there’s been a reduced UK rebate — as the UK prospered, Tony Blair brokered a deal to give up some of its rebate — and calls from some EU members to scrap the rebate completely. What’s more, in recent years, the EU has moved to include sex work and sales of drugs in gross domestic product (GDP) calculations, which further boosts the UK’s estimated contribution. (In 2014, the Office for National Statistics began adding up the contribution to the economy made by prostitutes and drug dealers — it came up with a figure of almost €10 billion!) As one newspaper headline put it at the time, the EU would be making the UK pay for our, er, bad habits. GDP is the term used to describe the value of all the goods and services that a country produces in a given time (usually calculated annually). As a measure, GDP is used to indicate a country’s prosperity and national development. You may also hear people talk about GDP per capita, which measures the ratio of GDP to the country’s population. To cut a long, and very complicated, story short, Eurosceptics were uneasy about the UK’s significant contribution to the EU’s spending pot, and questioning whether it was all worth it. “Picking up the slack” for others? Under EU rules, a member state’s budget deficits (where spending is higher than revenue) must not exceed 3 percent of GDP. And public debt (government and public agencies’ debt) must not exceed 60 percent of GDP. These rules are designed to ensure EU members manage their public funds in a sensible, sustainable way. That’s the idea anyway. The Italian government is going through a disciplinary process for falling foul of these rules, after reporting a deficit of 3.1 percent and public debt of more than 130 percent of GDP. To put that in context, the UK’s deficit is 1.8 percent of GDP and public debt is around 87 percent of GDP — the latter being higher than the EU’s threshold, but nowhere near as large as Italy’s. This disparity across the EU is another major underlying factor in the UK’s distrust of Europe. To some, it seemed the UK was picking up the slack or propping up countries that were not as fiscally responsible as others. How Brexit will affect immigration and the free movement of people Many Remainers suggest that immigration was behind the UK public’s decision to vote “out.” It wasn’t the only issue, but public opinion appears to show that it was one of the key factors. But, for some reason, the issue seemed to catch the mainstream political parties by surprise — even though the growing backlash against the idea of free movement was plainly obvious to anyone who read the newspapers or listened to the average conversation on the high street in the run-up to the Brexit referendum. To stem the negative tide, before the Brexit referendum, David Cameron tried to negotiate a “handbrake” system for the UK benefits system. This system would have denied EU migrants full benefit entitlements for a set period of time after they arrived in the UK, and was designed to combat sentiment that too many EU migrants came to the UK to claim benefits. However, EU leaders believed this system went against the principle of the free market, and the idea was rejected. Not only did large sections of the UK media portray EU migrants as coming for the benefits, but it also portrayed them as “pinching British jobs.” The two fears aren’t exactly compatible — are migrants coming to live off welfare or to steal people’s jobs, which is it? — but it goes to show how Brexit is such an emotive issue for Brits. Ultimately, the overwhelming sentiment from much of the media was that EU migrants were a “drain on the system.” Yet, official government figures show that EU migrants are in fact net contributors to UK finances, meaning they pay more in taxes than they take out in terms of public services (like healthcare, education, and so on). In fact, an Oxford Economics study found that the average EU migrant contributes €2,300 more to the public purse each year than the average British adult. In other words, EU migrants living in the UK more than pay their way. The tricky issue of trade under Brexit Opinions and statistics regarding UK–EU trade will vary depending on who you talk to, and in fact the UK and EU calculate export trade differently (which is helpful of them). One thing is clear, though: The UK runs a trade deficit with the EU as a whole, which means the UK imports more goods and services from the EU than it exports to the EU. In 2017, UK exports to other EU countries totaled €274 billion while imports from the rest of the EU into the UK totaled €341 billion. Those figures are based on Office for National Statistics data — the EU calculates imports and exports slightly differently. Depending on which source you look at, between 8 percent and 18 percent of EU exports arrive in the UK. Meanwhile, UK exports to the rest of the EU come to well over 40 percent of total UK trade. This means the UK is heavily reliant on the EU as a trade customer. On the other hand, a staggering 23 member states have a trade surplus with the UK — which means they export more to the UK than they import from the UK. Germany and Spain are the biggest EU exporters to the UK. On that basis, Eurosceptics argue it’s in the EU’s best interest to negotiate a trade deal with the UK as soon as possible. There’s also the issue of financial markets. As a leading worldwide stock market, London is key to Europe’s money markets and commodities, and many European companies have loans that are financed through London. Quite what will happen when these loans are due to be refinanced remains to be seen. But if a workable solution isn’t reached, it will impact not only the London financial market, but also European money markets and everyday European businesses. Brexit and UK sovereignty Slowly but surely, more and more power has been transferred from EU member states to Brussels. As an example of this, the European Court of Justice has dealt a number of hammer blows to the UK government with various policies being ruled illegal. A key argument of Eurosceptics was that the British public never voted to join a federal Europe, where the UK’s laws would be dictated by the EU. Nor did they agree to the European Parliament having the final say on policies passed by the UK Parliament. The UK joined an economic union, not a social and political union. If the people voting in the 1975 referendum had known they were ultimately voting to stay in a federal Europe, would the result have been different? Quite possibly. A big part of the problem lies with the politicians, here — specifically, a lack of honesty on where Europe was going and what it would mean for UK sovereignty. In his 1971 white paper on joining the EEC, then Prime Minister Edward Heath promised “no erosion of essential national sovereignty.” Yet, in 1972 the UK Parliament passed the European Communities Act, which accepted the supremacy of EU law. You could argue Heath’s word essential leaves some wriggle room, but, to the voting public decades later, it seemed like the wool had been pulled over a lot of people’s eyes. The Brexit vote: How the Brexit referendum results played out across the UK The UK’s constituent countries voted quite differently in the Brexit referendum. The following breaks down the Brexit vote results by country. UK Countries Brexit Vote Results Country Percent Voting to Leave Percent Voting to Remain Result England 53.38% 46.62% Leave Scotland 38% 62% Remain Wales 52.53% 47.47% Leave Northern Ireland 44.22% 55.78% Remain Devolved parliaments in Scotland and Wales (even though Wales voted to leave as a nation) have been highly critical of the move to leave the EU, and the ruling Scottish National Party (SNP) government in Scotland has been trying to use the result to push for another Scottish independence referendum. The situation in Northern Ireland is slightly different, with the ruling Democratic Unionist Party siding with the UK government on Brexit (even though the public in Northern Ireland voted to remain). And despite the fact that the Welsh population voted to leave, the Welsh devolved parliament is siding with its Scottish counterpart on a remain policy. Isn’t politics fun? In any case, what this will ultimately mean for the United Kingdom as whole remains to be seen. For now, the jury’s out, and we’ll wait to see if a Scottish independence vote does materialize. Meanwhile, what did the EU make of the Brexit referendum? Like many in the UK, prior to the Brexit referendum result, EU officials generally felt there wasn’t a chance in hell that the British public would vote to leave the EU. Secure in this belief, the EU itself took quite a backseat role in the Brexit referendum, doing little to play up the benefits of EU membership or counteract claims from Leave campaigners. Just like David Cameron, the EU was looking forward to finally resolving this nagging issue of a UK exit. The vote for the Brexit referendum was supposed to kick the subject into the long grass so that everyone could get back to the business of governing. But things didn’t exactly pan out that way, and the UK’s tumultuous relationship with the EU was reaching its painful, drawn-out climax. Regardless of any split opinions, Brexit will have an impact on world relations in years to come.

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