So now we (sort of) know when the UK government is likely to trigger the two-year Article 50 notice and negotiating period for Brexit – likely by the end of March 2017. This reflects some tactical thinking by the UK government. Elections in 2017 in Netherlands, France, Austria and Germany will hamper any negotiations as those governments will be in election-mode, but waiting until the end of 2017 to start the two year process would mean that the critical last six months would fall during the next elections to the European Parliament and EU Commission. The march 2017 date puts the two-year period as closely as possible in the middle of those events, seeking to maximise the available negotiating period outside of electioneering.

At a recent breakfast event held by Nabarro’s Brexit Group, a diverse mix of clients and contacts heard from speakers Nick Keable, Chief Executive of Development Intelligence, a specialist political strategy consultancy who discussed the political and economic perspective; Rick Cudworth, head of Deloitte’s Brexit Centre, and Alasdair Steele, head of Nabarro’s Brexit Group, who each discussed what Brexit might bring and how people are planning for it.

Key themes identified at the event included:

• the real economic impacts of Brexit on the UK economy are still to be felt and will come in waves as events unfold
• it is highly unlikely that there will be an early general election in the UK ….
• … and equally unlikely that there will be any second referendum
• the Brexit Paradox: controlling immigration v access to the single market – the country is more concerned about immigration and so that is what the UK government is most likely to focus on in negotiations
• as a result, a “hard” Brexit is looking more likely at the moment
• the need for businesses to be prepared by doing some thinking around possible Brexit scenarios and the steps that would need to be taken to deal with those outcomes (whether now or later)
• identifying clear decision points – when does something need to be started to be completed in time for Brexit itself?
• businesses are concerned and, although there is some transactional activity, it is more subdued than over the last few years (but still better than at the height of the financial crash!)
• although the expiry of the two-year Article 50 negotiating period would trigger an automatic exit of the UK from the entirety of Europe, it was highly likely that there would be some form of (very) last minute transitional deal – though what this would look like, and whether it would be legally sustainable, is completely unknown
• “what is clear is that nothing is clear”

Despite all the uncertainty, at its core the UK is, and will continue to be, a good place to do international business because of its business and legal infrastructure, depth of markets and skills base, as well as English being the most popular international business language. As the UK government tries to balance the conflicting aims of having the strongest negotiating position (by keeping its cards close to its chest) versus Parliament’s business, and the general population’s desire to know what sort of Brexit we are aiming for, we can expect to see a lot more debate and conjecture over how, what and when Brexit will look like.

Author: Alasdair Steele, Partner, Nabarro LLP

www.nabarro.com

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