On 23 June next, the British public will decide whether the UK should remain in or leave the EU. A vote to leave could have significant implications for Irish and other EU businesses operating in the UK.
Earlier this year, David Cameron secured a new settlement which will govern the UK’s EU membership should the UK vote to remain in the EU. Essentially, the deal secured by Mr. Cameron means that, should the UK vote to remain, UK businesses will not be discriminated against because the UK is outside the Eurozone, and the UK will not have to pay for Eurozone bailouts. In addition, targets to reduce regulation are to be set and more free trade agreements entered into (e.g. with the USA and Japan), something that should benefit businesses operating across the EU. On immigration, a topic that has been hotly debated, an “emergency brake” will apply on the ability of new EU migrants to claim in-work benefits in the UK for a period of up to four years.
If the UK votes to ‘Remain’, then this new settlement will come into effect the day that the UK Government informs the EU Commission that the UK has decided to stay in the EU. Only then can the legislative process to enact those parts of the settlement that require new EU legislation begin. If the UK votes to ‘Leave’, then the settlement will fall away in its entirety.
Should the UK vote to ‘Leave’ , a Brexit would not happen overnight. Instead a lengthy and complex round of negotiations would commence. Notice to leave would have to be given under Article 50 of the Lisbon Treaty. The UK would then have up to two years to negotiate an exit agreement with the rest of the EU, and many commentators consider that it could take even longer. During this period, the UK would remain a full EU Member State and would continue to be bound by EU law.The UK would also continue to take part in all EU decision-making - except in relation to its exit agreement.
How much access the UK would have to the Single Market post a Brexit would depend on the terms of the exit agreement that the EU agrees with the UK. Norway, for example, although not a member of the EU, has access to the Single Market for most goods. However, it contributes substantially towards the EU budget, but does not have any EU representation. Other countries, such as South Korea, have negotiated limited access to the Single Market without budgetary contributions. If all else fails, both the UK and the EU are members of the World Trade Organisation and must offer each other their most favourable tariffs.
So what would a ‘Brexit’ mean for Irish and other EU businesses operating in the UK? One thing is clear, the impact of Brexit will not be the same for all sectors and will depend on a large extent on the amount of access the UK continues to have to the Single Market post a Brexit. EU imports to the UK and UK exports to the EU could be subject to tariffs and customs barriers meaning higher costs for EU businesses. If no trade agreement is reached between the EU and the UK, then the UK’s WTO tariffs (whatever the UK decides these should be) and the EU Customs Tariffs would apply. Without the free movement of goods, it would be more difficult for Irish and other EU businesses to supply UK customers (and vice-versa). Without the free movement of people, Irish and other EU businesses may have restricted access to UK workers.Whatever happens to those EU (non-UK) workers currently working in the UK is likely to be dealt with in the exit agreement.
In summary if the UK votes to “Remain”, the status of the UK within the EU will be even more defined and differentiated compared with that of the other EU Member States. If the UK votes to “Leave”, there will be some uncertainty as to the form of the UK’s future relationship with the EU, as well as uncertainty as to how long it will take to agree the terms of that new relationship. This, in turn, is likely to lead to uncertainty for businesses which could last for years.
Whichever way the UK votes, this is a once in a generation vote!