15 August 2019

Boris & Brexit: Deal Or No Deal

This article was written by Vanessa Docherty and Rosanna Muñoz-Britton.

Will Boris save or slaughter 45,000 Northern Irish dairy cows?

The new Prime Minister of the United Kingdom (UK), Boris Johnson, succeeded Theresa May last month and now takes on the challenge of Brexit, with tentative plans to renegotiate the Brexit deal previously agreed by Theresa May and pledging to leave the European Union (EU) by 31 October 2019, the current intended deadline for the UK’s departure. So, what might happen…

No deal – the default option

Currently looking like the most likely scenario. If Mr Johnson is unable to renegotiate a deal with the EU and Members of Parliament (MPs) are confronted with a ‘no deal’ option, they may choose to accept or block a ‘no deal’. If accepted, the UK will leave the EU without any deal in place on 31 October. If blocked, the EU and UK may agree to a further extension to the current deadline, at which point, the possible options would be a vote of no confidence, a general election or a second referendum regarding the UK’s departure from the EU. 

Brexit deal with major changes

Another option is that Mr Johnson is able to renegotiate a Brexit deal with major changes to Mrs May’s original deal. If this process is completed by 31 October, MPs will then elect whether or not to back the new deal. If the deal is supported, the UK will depart from the EU with Mr Johnson’s new deal. If it is not, MPs will then be faced with a no deal scenario unless the UK seeks a further extension to the intended deadline to continue negotiations. If MPs do not support Mr Johnson’s new deal and no extension is sought, MPs will be faced with a no deal scenario.

Brexit deal with minor changes

A third, but less likely possibility is that the deal which Mrs May has previously agreed is renegotiated with minor changes. If MPs were to support this option then the UK would leave the EU on 31 October with this revised deal. If the revised deal is not supported, MPs will again be faced with a no deal scenario.

The difficulty that now faces Mr Johnson is that the EU has repeatedly told the UK that it will not consider amendments to Mrs May’s deal though Mr Johnson contends that the EU will change its stance now that there is a real threat that the UK could leave without a deal. However, the EU is showing considerable resilience and renegotiation of a deal is looking less and less likely.  

Legal implications if there is a no deal

If no deal is concluded by the day of exit and there is no further extension granted, the UK will still leave the EU on 31 October but without any agreement to govern its departure. At this point EU law will cease to apply and consequences of a ‘no deal’ include, but are not limited to:

  1. the ‘four freedoms’ will no longer apply;
  2. the UK will no longer be part of the EU’s single market and customs union;
  3. mutual recognition of professional qualifications will cease;
  4. UK-EU trade in goods and services will become subject to EU rules which apply to non-EEA countries and tariffs would be triggered;
  5. UK law being required to change in areas where it currently relies on EU reciprocity (for example, in areas such as jurisdiction and recognition and enforcement of judgments between EU member states);
  6. the transfer of personal data from the EU to the UK may require an alternative legal basis; and
  7. certain EU funding will no longer be available to UK entities (principally in the areas of education, farming and science).

In order to mitigate the impact of a ‘no deal’ as much as possible, the UK government is progressing post-Brexit bills, statutory instruments, policies and procedures which aim to come into effect by the day of exit as well as seeking to roll over existing EU trade agreements.

Mr Johnson will also then be in the position to negotiate the future UK-EU relationship agreement after Brexit, assuming sufficient goodwill remains for embarking upon such negotiations.

Legal implications if there is a deal

If a deal is concluded, a post-Brexit transition period will run from the day of exit until 31 December 2020 during which negotiations will take place for the future UK-EU relationship based on a political declaration which was agreed between Mrs May and the EU and approved by the European Council in November 2018. The transition period could be further extended by up to two years. During this time, most EU law will continue to apply in the UK and the UK will continue to participate in the EU customs union and single market. Mrs May’s existing withdrawal agreement (WA) seeks to clarify what will happen when EU rules cease to apply in the UK in the short term and preserve many existing rights of UK citizens resident in EU member states and vice versa. Further, the European (Withdrawal Agreement) Bill will give effect in UK law to the UK’s obligations under the WA.

If negotiations are not concluded as to future UK-EU relations by the end of the transition period, the WA controversial Irish backstop would come into effect, meaning that a single UK-EU customs territory would be established to maintain a seamless border on the island of Ireland. In addition, some ‘no-deal’ scenario events would be triggered as the WA does not address a number of long term future arrangements for the UK-EU.

In the event of a deal or no deal scenario, the European Union Withdrawal Act 2018 will also create a body of retained EU law which will include UK law that implements a number of EU requirements. In addition, the UK government will make post-Brexit policy changes via separate primary legislation and will need to clarify and likely amend the existing regime as to UK-EU reciprocity arrangements.

And for those who are wondering, a no deal will unfortunately lead to the slaughter of the cows (and some British lamb).

Breaking down the jargon…

Block

Various options for MPs including taking control of parliament, the timetable for Brexit or voting out the government.

Brexit

The withdrawal of the United Kingdom from the EU.

Customs union

The European Union Customs Union is an alliance formed by the members of the EU that ensures (a) the tariff-free movement of goods within the EU, whether those goods are made within the union or imported, (b) implements standardised rates of customs duties on goods imported from outside the union and (c) enforces a comprehensive system of regulations for the region's imports and exports.

Four freedoms

EU wide agreement for the free movement of goods, people, services and capital.

Single market

Refers to the EU as one territory without any internal borders or other regulatory obstacles to the free movement of goods and services.

Vote of no confidence

A chance for MPs to hold a vote on whether they want the government to continue. Such vote has the power to trigger a general election. Any MP can propose a motion of no confidence.


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