Brexit strategy, Brexit and your strategy
Understanding what "Brexit" means, what Brexit could look like and what that means for your business.
The public debate on Brexit is so dominated by shrill tones that it is difficult to know even what 'Brexit' means; after the recent UK general election, may may not even mean Brexit! We look at whether or not Brexit will happen, the terms on which the UK will leave the EU and what that will mean for British businesses.
In the financial services sector, the prudential regulator wrote to firms' CEOs in April requiring that they prepare Brexit contingency plans by mid July 2017. Most firms will have complied with that requirement, but it is only a first step in many. To consider these issues, we will shortly publish a report titled:
Brexit: Fraying at the edges
And subtitled: A review of Brexit, the Brexit process and probable outcomes and what they will mean for the UK in the short and longer terms.
Brexit: What does it mean for your business?
In April 2017, the CEO of the Prudential Regulatory Authority, Sam Woods, wrote to firms supervised by the PRA to require those firms to develop and to deliver to the supervision teams by mid July a contingency plan for Brexit. Every firm, whether in the financial services sector or otherwise, should be considering what Brexit might look like and what it will mean for them strategically and operationally.
There is no shortage of misinformation around on what Brexit might mean. The notions of a hard or soft Brexit, while popular media fodder and politically catchy phrases, are asinine. The Government has made it abundantly clear – and logic supports them – that leaving the EU, rescinding the 1985 Schengen Agreement and the jurisdiction of the European Court of Justice are pre-requisites for a Brexit. That implies exiting fully the EU as envisaged by Treaty of the European Union (the Lisbon Treaty) and stepping back from at least one of the four freedoms of the EU – the freedom of movement of people, at least as that freedom was interpreted in Lisbon in 2007. Any retention of the other freedoms over and above the provisions of international trade law and World Trade Organisation rules – specifically terms under the WTO's 'Most-Favoured Nation' status – are a matter for negotiation between the parties – the European Council (not the European Commission) and the British Government.
The final terms of any agreement are difficult to envisage and may take many years to finalise. However, the outer bounds of the agreement under WTO MFN are readily understood. That is where firms' contingency plans should start.