How a ‘no deal’ Brexit result could affect the UK.
No more Passsporting
As it stands, there is no certainty that British negotiators can retain passporting rights for UK businesses who wish to continue trading within the EU. When discussing the future of Britain’s financial services, Michel Barnier has stated; “In leaving the single market, they lose the financial services passport.”
But what about other industries?
In the event of a ‘no deal’ Brexit result, it would appear that the passporting rights of a number of industries (if not all) would be revoked. This means that UK companies which transport goods across the EU may need to set up operations in Ireland (or another EU member state) if they plan to continue trading in the EU. The European Commission has warned of the serious consequences a ‘no deal’ Brexit result could bring for a number of UK industries.
A large amount of the medicines produced in the UK are shipped to EU member states. Currently all of these medicines are authorised by the European Medicines Agency (EMA). However, the agency is leaving the UK and moving to Amsterdam post Brexit. In the event of a ‘no deal’ Brexit result, it would be likely that the EMA would no longer be the authorisation agency for the UK. This would result in a scenario where all medicines going from the UK to the EU would need to be retested upon being exported. This would slow down the supply chain for medicines dramatically. The EU has informed the pharmaceutical industry to develop alternative supply solutions in preparation for a potential ‘no deal’ Brexit result.
In the event of a ‘no deal’ Brexit result transport operators such as long-haul lorry and coach drivers will need to obtain certification from one of the 27 member states if they want to continue to work across Europe. Their UK certificate of professional competence will no longer be sufficient. UK transport companies operating across the EU will also need set up operations in Ireland (or another EU member state) if they plan to continue trading in the EU.
Aviation carriers are subject to a number of restrictions. A carrier must have its headquarters in an EU member state, if it wishes to fly passengers and luggage across the EU. In addition, a carrier must be majority owned by EU member states, or nationals of EU member states. Furthermore, pan Atlantic services will be disrupted until bilateral agreements can be reached between the UK carriers and third party countries such as the US. Other industries to be affected by a ‘no deal’ Brexit result would be agriculture, and the food and drink industry.
David Davis concerned
In a letter to Theresa May, obtained by the Financial Times, Mr Davis said he would urge the EU to drop measures and guidance that could require UK companies to relocate to Europe or risk contracts being terminated in the event of a ‘no deal’ Brexit result. Mr Davis warns Mrs May that EU agencies have issued guidance to businesses stating that the UK will become a "third country" after Brexit in March 2019, with no reference to a future trade deal sought by both sides. In response Margaritis Schinas, the current Chief Spokesperson of the European Commission and a Deputy Director-General at the Commission's DG Communication, said the EU "don't feel there is anything new for us to say" about a transition period or trade deal, "since this is part of the next stage of the negotiation". Theresa May had previously commented that a “no deal would be better than a bad deal.” For this to be the case, the ‘bad deal’ that she spoke of would have to be very bad indeed. We will have to wait and see the outcome of the next set of talks. Trade negotiations are due to commence in March 2018.
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