Brexit: the Nike election?

The outcome of the general election has given the Conservatives a healthy majority with which, for better or worse and regardless of one’s personal politics, they can and will “Get Brexit Done”. It could be said that swathes of the electorate have given the Prime Minister a mandate direct from the sportswear giant Nike*“Just do it”.

In this sense at least, the Prime Minister has freed himself and his party from the limitations of minority government and also, perhaps, of the need to accommodate Brexiter ‘ultras’ in his own party. There is perhaps some irony that the price of the Conservative and Unionist Party achieving this is a significant electoral shift away from unionism (with a small u) in both Scotland and Northern Ireland.

The Tories now have the numbers to get the revised EU Withdrawal Agreement approved by Parliament, meaning it looks certain that the UK will leave the European Union on 31 January 2020. That alone, however, does not get Brexit done: it is only part one of the job.

After exit day the UK moves into a transition period until the end of December 2020 and in which the future trading relationship between the Union and the UK is to be negotiated, ie Brexit part two. During this phase it will be ‘business as usual’ and the UK will remain subject to EU rules and case law, including anything coming into force before the end of the transition period. And the European Court retains jurisdiction during this time.

The Withdrawal Agreement allows for the transition period to be extended once. It does seem difficult now to envisage Mr Johnson asking for such an extension. His previous request for an extension to part one (the article 50 period) was made under the very different constraints of minority government and under the obligation to do so imposed on him by the European Union (Withdrawal) (No 2) Act 2019. That Act does not apply to the transition period and in any event the balance of power in Parliament has now shifted back to the executive.

It follows that the prospect of leaving the transition period without an agreement on future trading terms remains a possibility – ie there could be a form of ‘hard’ Brexit in under thirteen months, raising once again the need for contingency planning by business generally and financial services firms in particular.

The concerns around this are exactly the same as with the previous article 50 deadlines in March, April and October last year: the need to ensure that operations touching Europe can access the single market from an appropriate base inside its territory, that staff are able to remain in the UK or EU as necessary, that supply chains, commercial contracts, corporate and employee insurance policies are Brexit-ready, that currency exchange risks are addressed and hedged as required, and that positive decisions are made about any legal claims with EU elements given that the rules on private international law are going to change.

Brexit is not done yet.

[* Classicists such as Mr Johnson might wryly recall that the goddess Nike was the daughter of Styx, the ruler of the underworld.]


Kinley_A-4_web

Director of Policy & Government Affairs
alistair.kinley@blmlaw.com

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