UK government details implications of 'no deal' Brexit

Out-Law News | 23 Aug 2018 | 1:32 pm | 2 min. read

The UK government has started to outline the impact that a 'no deal' Brexit could have on businesses and consumers.

On Thursday it published 25 technical notices spanning a broad range of issues and sectors, including financial services, the regulation of medicines and medical devices, importing and exporting, farming and VAT, that highlight the practical effects that could result from the UK exiting the EU on 29 March 2019 without having reached an agreement on the terms of its withdrawal with the remaining 27 EU member states.

Further 'no deal' technical notices are expected to be issued over the coming weeks.

Guy Lougher, an EU and Brexit specialist at Pinsent Masons, the law firm behind, said: "The government’s publication of the 25 notices is a wake-up call for those businesses that have not yet done any structured scenario planning in order to understand the potential implications for them of a 'no deal' outcome."

"It is clear that in many respects a no deal outcome will likely have significant consequences, and necessitate trading differently. For example, the notice on 'trading with the EU if there’s no Brexit deal' outlines some of the practical ways in which businesses will need to trade differently with the EU post-Brexit. Businesses need to engage now with the subject matter of the notices, and organise scenario planning sessions if they have not already done so, given the risk and implications of a no deal outcome," he said.

Dominic Raab, the UK's secretary of state for exiting the EU, said that while agreeing a "good deal" with the EU27 is "the most likely outcome" of Brexit talks, it is important that the UK is ready should no withdrawal agreement be reached.

Raab said: "We have a duty, as a responsible government, to plan for every eventuality. And to do this, we need to have a sensible, responsible and realistic conversation about what a no deal situation really means in practice."

The technical notes contain details of the steps the UK government has already taken to help ensure a smooth Brexit transition for businesses, even in the event of a 'no deal' scenario. This includes its move to establish temporary regulatory permissions and recognitions in the financial services sphere to allow firms based in the European Economic Area (EEA) to continue operating in the UK post-Brexit.

However, the notices also contain new warnings about the potential impact a 'no deal' Brexit could have on business operations and consumer services. In the area of payments, the cost of cross border card transactions could increase, payment surcharges could apply, and processing times for Euro transactions could get slower, for example.

The government also flagged potential changes to the VAT rules and procedures that apply to transactions between the UK and EU member states, and said UK-based life sciences companies could face dual batch testing regimes as the EU, as it stands, has said UK-approved testing will not be recognised by regulators in the trading bloc.

In one technical note, the government also outlined its plans to apply a new state aid regime in the UK spanning all sectors to mirror the existing framework that applies under EU law.