8th October 2018
The UK Government is working towards a situation where, on 29 March 2019, there is a withdrawal agreement covering the rights of UK and EU citizens, the Northern Ireland border and a transition period until December 2020 while the UK remains in the single market.
During the transition period, it would be business as usual as far as imports and exports are concerned. Politically, however, the UK would be outside the EU and would not have representation in the European Parliament or the European Commission. Although this has been touted as a period in which businesses can prepare for Brexit, in reality it will be the period in which the UK and the EU negotiate a trade deal.
No withdrawal deal
So what does a no-deal Brexit actually mean? In short, it describes a situation where the UK leaves the EU without having agreed the terms of a withdrawal agreement and without an agreed transitional period: the UK would exit the single market and begin to trade with the world under World Trade Organization (WTO) rules; there would be no agreement relating to the Northern Ireland border; and there would be no agreement on the rights of EU citizens in the UK and UK citizens in the EU. This is the no-withdrawal deal possibility.
No trade deal
But there is another form of no deal. Even if the politicians sign a withdrawal agreement and reach a consensus on trade deal principles by 29 March 2019, it won't be binding until a full trade agreement is signed. And regardless of whether a withdrawal agreement is signed, if the trade deal talks fail we will have a no-trade deal situation at the end of the transition period. The UK would then be faced with trading under on WTO rules, although the transition period may have given the UK the opportunity to reach trade deals with other countries.
What does this mean for businesses?
In addition to the potential economic effects, there are many ways in which a no-withdrawal deal or a no-trade deal situation could affect a business. Factors may vary depending on the sector in which the business operates, its supply chain and its customer base, but key common issues are likely to include:
These issues cut across business of all sizes and from all sectors. However there are many other ways in which businesses might be affected by a no-deal Brexit. Businesses should be preparing for Brexit – and that now includes the possibility of a no-withdrawal Brexit.
To learn more about our views on the legal implications of Brexit, visit our dedicated Business of Brexit pages or contact Kate Westbrook from our Brexit team. We also offer a Brexit MOT for your business.