What’s going on here?
With Brexit day fast approaching, Theresa May’s mantra that ‘no deal is better than a bad deal’ may actually become a reality.
What does this mean?
A no-deal Brexit scenario is one where the EU and the UK are unable to negotiate a deal before Brexit day on 29 March 2019. If there is no agreement reached, it would mean that Theresa May’s proposal of a 21-month transition period would be off the table. May’s Brexit plan, the Chequers Agreement, which laid down the UK’s position for talks with the EU, has been dismissed by EU leaders who say it will not work. The French Government has also stated that a no-deal Brexit would be preferred over the Chequers Agreement, while the British Government is firm in that it will exit EU either with the Chequers Agreement or without a deal. Without a specific agreement in place, the uncertainty would be dragged on. This could lead to problems in many areas of law, such as immigration, leaving the fate of EU citizens and Brits abroad unknown.
Why should firms care?
Leaving the EU without a deal would leave a lot of uncertainty in the UK. There would be a legal vacuum in a few key areas including immigration, financial regulation and effectiveness of European arrest warrants. There would also be uncertainty regarding the status of commercial agreements with EU companies. This could trigger change in law clauses which are commonly found in commercial contracts. Firms dealing with such clients would need to navigate their way through this legal chaos to decide their obligations under the new rules.
UK’s legal sector would likely suffer a huge loss. Forecasts predict that close to £3 billion would be lost in revenue and around 12,000 jobs would be lost by 2025 in the event of a no-deal Brexit. The growth of the legal sector is also likely to slip to 1.1%. Law Society president Christina Blacklaws states that “Brexit is likely to have a significant negative effect on the legal sector in the medium and longer term. This is largely due to the knock-on impact of Brexit on the wider economy as demand for legal services relies on the success of other sectors of the UK economy”. This impact would then translate into a lower demand for legal services and thereby a bleaker future for British based law firms.
Report written by Smrithi S.
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