07/10/2019 | Kate Dunston

Geoffrey Podger talks Brexit: No Deal versus the PM’s Deal – what’s the difference for business?

07/10/2019 | Kate Dunston

Geoffrey Podger talks Brexit: No Deal versus the PM’s Deal – what’s the difference for business?

Like all good questions, the one above is not actually altogether easy to answer. Whilst the Government state they favour the PM’s Deal over No Deal, we actually know much more about the consequences of No Deal for business than of Boris Johnson’s. This reflects the extensive effort made by the Government in recent months to give guidance on No Deal, whereas for understandable and tactical reasons, we have much more limited information on what the Government is currently seeking to negotiate with the rest of the EU. What follows can only therefore be rather general, particularly as regards the PM’s Deal, but our knowledge of No Deal requirements can be supplemented by an excellent Government website which enables you to access guidance specific to the exact circumstances of your business. It is also provisional, as that which has so far been announced regarding the PM’s deal could be amended if agreement on it is reached.

Implementation times

The first major difference between the deals is that the PM’s deal would have a transitional period until December 2020, whereas No Deal by its nature, comes into effect the day after the UK has left the EU. So, under the PM’s Deal everything more or less continues as before during the transitional period, whereas under No Deal the changes kick in immediately.

Regulations and standards

The second issue is then what will happen to regulation and standards. Under either deal legal requirements will remain much the same in the short term. So, the domestic UK Health and Safety and food safety requirements will remain generally the same and will continue to be regulated by Local Authorities, the Food Standards Agency and the Health and Safety Executive as now. However the PM’s letter to the President of the EU Commission proposing his deal, makes very clear that after the transition period the UK Government (other than in relation to specific proposals for Northern Ireland) intends to take control of its own “regulatory affairs and trade policy” which is in sharp distinction from Mrs May’s offer to stay in line with EU environmental and workplace safety standards. This does open up the prospect that under either deal scenario the UK will be prepared to change standards if there are good grounds for doing so – most probably in areas relating to products / activities which are not related to exports to the EU. It is also clear that the UK Government (again subject to special arrangements for Northern Ireland) intends after Brexit to have the EU as a trading partner under a free trade agreement, rather than in a closer relationship. This will mean that the UK will be able to enter into its own free trade agreements and businesses have the potential to buy some products at a cheaper price on world markets rather than under the EU tariff system.

EU workers

A major concern for businesses has been the employment position of permanent and temporary staff of EU origin after Brexit. This is a key issue in areas such as the food industry where one third of employees are thought to be of EU origin. We do not know precisely what the PM’s Deal has to say on this, although it is surely likely to be at least as generous as under the No Deal arrangements which have already been announced. Essentially these would enable EU citizens already working in this country to apply for pre-settled or settled status, depending on their date of arrival, with arrangements also made for their dependants. Businesses seeking to encourage their EU workforce members to remain in the UK after Brexit would therefore be well advised to direct them to the Home Office website and to note in particular the application dates, which vary according to the date and method of Brexit. For the many workers (e.g. in catering) who are anxious to obtain a temporary right to work in the UK but do not intend to settle here there will be a scheme designed for them which again can be found on the Home Office website. This will allow a further 36 months’ work in the UK from the date the application is granted. The latter are essentially short-term arrangements as the Government’s direction of travel would seem to be to have a points-based system in which EU citizens would compete on an equal footing with non-EU citizens and be admitted on the basis of national needs.

Imports and exports

When it comes to food imports and exports, there are clear differences between the PM’s deal and No Deal. Under the PM’s deal there will be, as explained above, the transitional period of around a year depending on the date of its conclusion when the situation will remain the same as now with the thought that at least some of these arrangements could be rolled forward into the proposed free trade agreement. Under No Deal all bets are effectively off and the UK will become subject to EU tariffs and controls from day one with the UK introducing its own tariffs on goods from EU countries (except for goods between the Irish Republic and Northern Ireland) in return. The position in Northern Ireland is further complicated in the PM’s Deal as the solution is proposed that Northern Ireland should maintain regulatory alignment with the EU on agricultural products and goods generally subject to four yearly confirmation, whilst remaining outside the EU Customs Union in the same way as the rest of the UK. Goods passing from the UK to Northern Ireland would be subject to regulatory checks but not in the other direction. Inevitably all these new controls will have the potential to lead to delays in the transit of goods and whilst a huge planning effort has been made to try to overcome them, transit delays are a major risk under a No Deal Brexit which may be particularly true in the initial period as the new arrangements bed in.

Taking a break

Finally, after all this you might well feel the best thing to do after Brexit comes in is to take a holiday! However even here there will be new challenges under No Deal. In particular passports will be valid for stays in the EU for up to 90 days but only if they have at least six months validity left at the end of your stay (and excluding any time added on because your previous passport was traded in early). You’ll also need to check your health insurance and driving documentation. Again, there is a useful website to visit.

To be – no doubt- continued…