With the impending Brexit disaster looming, there are too many variables. Will Members of Parliament (MPs) approve the only deal available; will the United Kingdom crash out of the European Union with no deal; or will the government crash out, and will there be no Brexit at all?
We are unlikely to get answers Tuesday evening, when MPs are scheduled to vote on the Brexit deal Prime Minister Theresa May put on the table. The deal is widely expected to get voted down, which will leave Britain business in a precarious position with no clarity and a March 29 deadline looming.
Companies and their compliance officers are understandably concerned.
The job losses at Ford and Jaguar Land Rover (JLR) have been blamed on industry problems, not on Brexit, though the Confederation of British Industry (CBI) predicts thousands of job losses if there is no deal, and JLR and Honda both have warned of dire consequences of the no-deal. The CBI says business can work with the current deal, but if it is not approved, the government needs to set out a way forward. Economic figures show the U.K. economy is at a virtual standstill and that it will go into reversal if there is no deal.
On Friday, the Department for Business, Energy and Industrial Strategy (BEIS) issued an update on its EU exit preparations. While the current deal remains the government’s top priority, it understands preparation for all scenarios is necessary. In December last year, the Conservative cabinet agreed to accelerate the next phase of no-deal planning.
“The economic consequences [of a no-deal] would be profound, widespread, and lasting. The International Monetary Fund has warned that, over the long run, GDP could be 5 percent to 8 percent lower than in a no-Brexit scenario, meaning less money for our public services and those who rely on them. Businesses would face new costs and tariffs. Our ports would be disrupted, separating firms from the parts they need to supply their customers. Trade deals with countries like Japan, South Korea, and Turkey would be lost.”
Carolyn Fairbairn, Director-General, Confederation of British Industry
In the meantime, the BEIS has recruited 700 new staff to work on its EU exit policy using additional funding allocated by HM Treasury for Brexit preparedness. It has also passed new legislation for the U.K.’s future outside the European Union, including 57 out of 63 statutory instruments required by April. These laws cover issues such as new laws for a nuclear safeguards regime that allow the country to continue to trade in the nuclear sector post-Brexit. Additional laws have also been put in place for the Office for Product Safety and Standards. Some 28 technical notices have been published on issues such as oil and gas, climate change, company law, and state aid. Technical notices, which continue to be updated, were documents originally published in the summer last year that gave advice on what businesses need to do in order to carry on exporting and importing goods and services. Legislation has also been put in place to replace EU directives on employment rights and renewable energy.
The department has also developed a system whereby U.K. regulators can recognise European Economic Area (EEA) and Swiss professional qualifications that are of an equivalent standard to U.K. qualifications. It has addressed the problem of cross-border power connections between the Republic of Ireland and Northern Ireland, which could get disrupted following Brexit. It has been working with the Office of Gas and Electricity Markets (Ofgem), the Northern Ireland Utility Regulator, and interconnector operators to ensure electricity and gas continue to flow across the border. It has signed Nuclear Cooperation Agreements (NCAs) with Australia, Canada, and the U.S. that allow civil nuclear cooperation with those countries when the EU arrangements cease to apply.
Once the United Kingdom leaves the EU Emissions Trading Scheme, legislation has also been put in place so companies still have to report carbon emissions, and there will be a carbon tax of equivalent impact. Secondary legislation was published in December so energy laws are in place to replace European network codes, Electricity and Gas Acts, and EU regulations under the Third Energy Package.
Communications have been developed with Cabinet Office and the Department for Exiting the European Union (DExEU), as well as other departments so business sectors are appropriately informed.
The government has launched a business readiness website that includes a tool to enable companies to find out what businesses need to do to prepare for the United Kingdom leaving the European Union, what’s changing in the industry, and information on specific rules and regulations.
The website also covers information regarding complying with regulations for employing EU nationals, importing and exporting, operating in the EU, and regulations and standards for products and services.