The IBSA (International Business Structuring Association) Brexit discussion meeting at Close Brothers Asset Management on Thursday, 30th May, was a fascinating insight into the legal, political and economic consequences of Brexit.
Malcolm Dowden of Womble Bond Dickinson started the meeting by explaining the UK legal issues involved and how a hard Brexit is not only possible but actually the default position as of 31 October 2019. This is particularly likely now that Parliament and the Government have virtually given up resolving the genuine concerns for business and is fast embarking on the summer recess. Indeed a no-deal Brexit becomes an unfortunate locomotive heading towards a precipice.
Malcom gave some examples of how the absence of any resolution to the impasse would affect business. For example, with a no-deal Brexit, GDPR personal data handling after the UK departure means that a data processor located in the EU would not be able to rely on EU "model clauses" to transmit relevant data to a controller in the UK. Regulatory standards in various different industries may vary and although the UK has currently adopted EU regulations, these may change as the UK seeks to maximise its attraction as a 'Singapore' type independent power house economy.
However, amongst the doom and gloom, there are some encouraging signs for business. It would seem that there is a strengthening in supply chain recognition where large companies are getting to know their SME suppliers and customers and helping them with customs procedures and reliefs for the first time. This vertical integration of systems to help those with limited resources may lead to improved relationships, cost savings and potentially a greater competitive edge.
Nikos Korogiannakis of Elias Neocleous & Co LLC then presented the European view on the legal and political issues of Brexit. In summary, he said that public opinion had lost interest in Brexit (much as it has in the UK), and that the UK itself does not seem to have participated in any new EU regulations since 2017. For example, the EU Regulation on Investment Funds in May 2019 did not have any contribution from the UK at all. So in a way, Brexit has already happened, and now we have to work out how the EU and UK will work together in the future!
Nikos commented on the legend that the UK will become the new 'Singapore' of Europe, but suggested that with EU legislation remaining as the status quo for probably a decade, such a hope...