What’s happening months after Brexit | KPMG | BE
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What’s happening months after Brexit

What’s happening months after Brexit

The UK will formally inform the EU before April 2017 that it is invoking article 50 of the European Union Treaty. The negotiations on the exit must be completed within two years, unless all other 27 member states unanimously decide to extend the negotiations. It seems very likely that Brexit will be effected no later than April 2019.


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What’s happening months after Brexit

The new British model

Theresa May has indicated there are four key issues she wants to realize for the UK:

  • Self-determination on immigration policy
  • No judicial power for the European Court of Justice in the UK
  • No financial contributions to the EU
  • No adoption of rules if the UK has had no influence in the introduction of same

In addition, May will put into effect a Great Repeal Bill in March of 2017, which the UK will use to revoke the European Communities Act (ECA) of 1972. This act confirmed the UK’s membership of the EU and ensures that EU legislation prevailed over British national legislation. This will no longer be the case after the annulment of the ECA. The British wish to adopt all EU legislation prevailing at that time and subsequently decide which components of that legislation will remain in force in the UK.

May wants the UK to become a sovereign and independent country again, in her own words: “There will no longer be a mechanism to impose rules on Britain without the consent of our elected representatives.”

Given these requirements, it will be virtually impossible for the UK to remain a member of the European Internal Market. The free traffic of people and the judicial powers of the European Court of Justice are indispensable for that. What is more, the difference between European law and British law will only increase over time. The UK will no longer automatically adopt new rules and legislative unity of law is no longer safeguarded by a single highest judicial body.

A complete exit, but what new form of cooperation will there be?

There is a considerable chance that the two-year exit process will be too short a period of time to reach agreement on the new relationship the UK might want with the EU. That means that the UK will leave the EU in April 2019, but that it is highly unlikely that a new cooperative framework will have been agreed. One of the difficult issues, for instance, will be the UK’s demand that it retains a say in the creation of European legislation, while it is no longer a member of the EU and does not recognize the judicial authority of the European Court of Justice. That will be difficult to reconcile.

If there is no framework cooperation agreement between the UK and the EU in April 2019, it means that trade between the two will fall back on the rules of the World Trade Organization (WTO). Cooperation with the UK will then be no different than cooperation with a country such as Russia or China. Unless…. a transitional arrangement is agreed, under which the UK does leave the EU, but many of the de facto relationships as they exist today as part of the EU membership remain in place.

Despite the strong language from Theresa May and demands in terms of sovereignty and independence, the UK is also looking towards reciprocal trade interests of the EU and the UK. In the words of Theresa May: “We must talk to our European partners about a cooperation that is beneficial to both parties. We do not intend to continue the relationship with the other 27 EU countries as if we are a friendly third-party nation, such as South Korea.”

All in all, a lot of uncertainty and volatility remains and the UK seems to be heading towards a complete separation from the EU while the new form of cooperation has not yet been decided.

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