The following is a roundup of recent developments concerning Brexit negotiations and the United Kingdom’s withdrawal from the European Union.

News Summary

The Migration Advisory Committee, a nonpartisan panel of economists, has been commissioned by the U.K. government to research and provide its recommendations on EU/EEA migration to the U.K., its effects on the domestic labor market and the most suitable post-Brexit immigration system for the U.K.’s economic strategy. The MAC is seeking public comments from immigration stakeholders by Oct. 27 and is expected to publish a full report by September 2018.

In the first of a series of Brexit policy papers to be released in coming days, the U.K. government today released its proposal for an interim customs union that would be a temporary measure when the U.K. leaves the EU in March 2019 to avoid the sudden imposition of trade barriers and prevent a hard border between Ireland and Northern Ireland. However, the U.K. would seek the right to negotiate bilateral trade deals with individual countries during the interim period – something currently prohibited by the EU Customs Union.

Many companies are not waiting for negotiators to reach agreement on trade and are putting plans into action to allow them to operate in post-Brexit Europe – moving headquarters or certain operations from the U.K. to elsewhere in Europe to protect against a hard break with Europe that would disrupt their operations across the region. The U.K.’s investment banking sector in particular will be required to move certain sectors of its business, which, given its size in the U.K. economy, could see a large number of jobs and capital leave the U.K.

Ireland may be one of the beneficiaries, with predictions of 4.8 percent GDP growth this year. Ireland topped the agenda at the last round of Brexit negotiations in July when both sides agreed that they want the Common Travel Area to be maintained. The issues involving Ireland, however, are complex and pose unique concerns for Ireland’s immigration, borders and trade, as examined in a BAL white paper released last week. The U.K. is scheduled to set out its proposal for avoiding an EU/U.K. land border between Ireland and Northern Ireland this week.

Immigration

Migration Advisory Committee Call for Evidence

The MAC has put out a call for evidence from immigration stakeholders, including businesses that rely on EU/EEA migrants in their labor force. The committee has asked a wide-ranging series of questions based on three categories:

  • EEA migration trends
  • Methods of recruitment and training of EU/EEA migrants
  • Cost and benefits of EEA migration

The responses will help inform the MAC’s final report and advice to the U.K. government on the impact of EU/EEA workers on the U.K.’s economy and how the U.K.’s immigration system post-Brexit should be aligned with a modern industrial strategy. A full list of questions and how to provide responses is available here. BAL will be providing clients with additional analysis and guidance in coming days.

Brexit and Ireland

The EU and U.K. have agreed to prioritize Ireland in Brexit negotiations and, following a meeting in July, stated their mutual intention to maintain the Common Travel Agreement and avoid a hard border between Ireland and Northern Ireland. The CTA provides British and Irish citizens special rights to travel without document checks and rights to reside without needing to apply for a residency permit. While the consensus on the CTA is positive news, the historical ties and geographic realities between the U.K. and Ireland present complex issues that are not likely to be resolved quickly or easily. To read further analysis, view BAL’s full white paper, “Brexit: What’s at Stake for Ireland” here.

Business

Temporary customs union?

The U.K. government is proposing a temporary interim customs union that would provide a transition period after the U.K. leaves the EU. The proposal would allow the U.K. to benefit from a customs union while attempting to negotiate bilateral trade deals with individual countries before the end of the interim period – a term that is unlikely to be accepted by EU negotiators. The arrangement would either be a streamlined customs union managed by Britain or a new customs arrangement with the EU that would not require a customs border.

Brexit’s impact on banking

The U.K. could lose more than 40,000 investment banking jobs to the EU if a hard Brexit forces banks to establish new units to continue operating across Europe. The funding of new EU operations is estimated to cost $30 billion to $50 billion, according to a report by consulting firm Oliver Wyman. Smaller firms may leave Europe altogether. Brexit threatens to remove the U.K. from EU law that allows banks in the U.K. to operate branches in Europe and European banks to operate in the U.K. without separate capitalization.

EasyJet headed to Austria

Among the companies moving their headquarters from the U.K., homegrown airline EasyJet has applied for an operating certificate in Austria. The certificate will allow the company to set up headquarters in Vienna and continue flights within Europe in the event that there is no deal on aviation by Brexit day in March 2019. Unlike trade, there are no default aviation rules that would kick in should the U.K. and EU fail to reach a deal about airline flights. According to EasyJet, the company already has staff in mainland Europe and would not need to transfer U.K. jobs.

NHS join other employers in voicing staffing fears

Brexiters campaigned that leaving the EU would revitalize the National Health System, but the NHS’s reliance on nurses from the EU has led the Royal College of Nursing to call for more certainty about their status, as well as that of new recruits post-Brexit. Nurses trained in the EU have already begun leaving the U.K. and applications have dropped 96 percent since the Brexit vote. To read an analysis of the U.K.’s current proposals concerning the free movement of people, click here.

Preparing Your Company

Companies concerned about how changes in their industries due to Brexit will impact their high-skilled workers may wish to contact their BAL professional to explore all options.

BAL also strongly encourages companies to provide their opinions and feedback to the U.K. government and engage in the policy debate over EU/EEA immigration by responding to the MAC’s Call for Evidence either directly or in coordination with BAL.

Earlier this year, BAL conducted a benchmarking survey that provided valuable insights into how U.K.- and EU-based companies have been impacted by Brexit and how employers in different industries have begun to plan for their high-skilled EU/EEA workforces.