Mark Deem and Chris Finney, who are Partners at the London office of Cooley (UK) LLP.
EU President, Donald Tusk, has published a proposal for a new settlement between the UK and the EU: “To be, or not to be together, that is the question which must be answered … by the British people [and] the other 27 members of the EU…” Commentators expect the EU’s heads of government to agree a version of Tusk’s settlement in less than two weeks; and the UK to hold an in / out referendum in June. According to the polls, the outcome of the referendum is too close to call. So, what should you do, to contingency plan against your #Brexit risks?
- Take a deep breath. Relax. Repeat.
- It’s a marathon, not a sprint. If the UK votes to stay in, nothing changes. But if it votes to leave…
- The referendum will not be the end; or the beginning of the end; although it might be the end of the beginning. The UK will give the EU two years’ notice that it’s leaving; and the UK and EU will negotiate the terms of their separation. This process might be truncated… or extended. If the UK and EU haven’t agreed terms or an extension by the second anniversary of the UK’s notice, the UK’s EU membership will lapse.
- The known unknowns. The UK will leave the EU. But it might try to come back by: (a) joining the European Economic Area (the Norway option); (b) entering a series of free trade agreements (the Swiss option); (c) negotiating a customs union (the Turkish option); or (d) trying to achieve something else. The UK Government has already rejected the first three options; so perhaps it will be the fourth. Who knows? In fact, we don’t really know how the “come back kid” decisions will be taken, by whom, or when. So, expect lots of delay, risk and uncertainty. Some businesses will want, need, or be forced, to contingency plan against this. Others won’t.
- One size does not fit all. If the UK leaves the EU, the EU’s Regulations will no longer have direct effect, and decisions of the Court of Justice of the EU will no longer have binding effect, in or on the UK. But the EU’s Directives will still be part of UK law, unless Parliament switches them off. In all probability, it will make “saving legislation” to stop holes appearing in the UK’s law instead. That will give the UK plenty time to work out what its law should be, and it will give most businesses time to plan their response.
- So: Take a deep breath. Relax. Repeat.