What does Brexit mean for the business sector?

Updated

The United Kingdom’s withdrawal from the European Union will affect companies that trade with the UK or are affected by UK participation in the single market in other ways. The business sector must follow the development of negotiations and prepare for all conceivable outcomes.

What happens in the event of a no-deal withdrawal?

There is an imminent risk of the United Kingdom leaving the EU without the Withdrawal Agreement being approved. If this takes place, it would do so according to the timetable that applies at midnight on 31 January 2020. 

If the UK leaves without the Withdrawal Agreement having been approved, the country will, in formal and practical terms, become a third country in relation to the EU. A no-deal withdrawal means there will be no transition period and EU law will therefore cease to apply in the UK. Trade with the UK will, in that case, be regulated on the basis of applicable international principles and rules from the WTO, for example. The EU will apply third country rules to the UK in relation to, for example, tariffs, customs controls and checks that EU requirements on goods are met. This can cause transport delays between the EU and the UK.

As regards exports to the UK, we are uncertain what tariffs will apply.

A no-deal withdrawal by the UK would also have an impact on many other areas, regulatory frameworks, etc. that affect the conditions for trading with the UK. This includes transport and logistic issues, product regulations for goods including the SPS area, opportunities for transferring personal data, public procurement, intellectual property law issues, eTrade contractual issues, and the conditions for conducting trade in services, including establishments and transferring staff.

How should companies get ready for Brexit?

The Government urges all companies concerned to take necessary measures to prepare for Brexit. In view of the current uncertainty, this should involve contingency planning to handle a no-deal withdrawal.

It is important that individual companies keep up-to-date with developments, analyse their specific risks and take necessary measures.

Several government agencies and other organisations are providing information about Brexit that targets the business community.

Links to public authorities and other organisations that provide information about Brexit 

Orderly withdrawal based on the agreement: transition period until 2020

If the Withdrawal Agreement enters into force, a transition period will begin when the UK leaves. This is intended to provide time for adjustment to what will eventually become the future relationship between the EU and the UK. During the transition period, the UK will proceed as if it were still an EU Member State, but without taking part in the EU’s decision-making. Thus, the country will be included in the EU’s legal system and be part of the single market and customs union. The period will run from withdrawal until the end of 2020. In the orderly scenario, the withdrawal will take place on the first day of the month following ratification of the Withdrawal Agreement. If the parties agree, the period can be extended once for a period of one or two years, and at most until the end of 2022. A decision to extend the transition period must have been taken by 1 July 2020.

Subsequently, the intention is for the future relationship between the EU and the UK to take effect. The framework for this has been outlined in the parties’ joint political declaration. Negotiations on agreements to regulate the future relationship can begin as soon as the UK has left the EU.

With regard to the future relationship, it is the parties’ objective to forge as close a relationship as possible given their negotiating positions. The UK Government has made it clear that it wants the UK to leave the EU single market and customs union. Even if the parties have agreed to create an arrangement that minimises the consequences of this as far as possible, it must be expected that it will be more complicated for EU-based companies to trade with the UK.

When will the outcome be known with certainty?

The risk of a no-deal withdrawal cannot be ruled out before an agreement has actually entered into force. For the UK’s part, approval by the UK parliament is required.