As negotiations are underway, are we looking towards a soft Brexit or a hard Brexit? How will each pan out for various UK sectors? How will they impact the pound and the economy? How will small businesses be affected? And though we’ve already seen a glimpse via the proposed bills in the Queen’s speech, what will our new laws look like?
Russell Brown, partner and head of employment, comments:
While it could be argued that the recent election result diminishes the likelihood of a hard Brexit, the reality is that the Government is holding its cards very close to its chest. We will only really start to get an idea of how things will progress now that negotiations with Europe have started; and let’s not forget these could last for up to two years.
Last week’s proposals regarding EU citizens being allowed to remain in the UK is the first tangible sign of there being some attempt to negotiate a soft Brexit, by which I mean a willingness to retain some formal links with the continent. From an employment lawyer’s perspective, there was a clear statement by all parties during the election that employment rights derived from the EU will effectively remain untouched. This leaves the door open to continued trading links with Europe, in the same way that it applies to EEA nations and Switzerland.
One of the main issues is going to be the so-called Brexit bill. This has such a major significance for both parties that it is likely to impact on all other aspects of the negotiations, particularly where liability is likely to lie in relation to long term commitments, such as pensions and loan guarantees, and the EU’s claims that we should continue to pay into the Brussels budget for two years after our departure from Europe.
What will the future hold for business? While many small companies perceive a reduction in red tape, those who manufacture and export to Europe will be concerned about the potential loss of access to the single market. There are also concerns about the impact of Brexit on lenders; given that access to finance is vital to growing businesses, this will be of particular concern if interest rates rise. If we face inflation due to a lowering value of the pound, banks may raise interest rates which could lead to creating negative equity for property owners. A decrease in property values will also be a concern to many, meaning they put future acquisitions and associated job offers on hold.
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