The votes have been counted and the Conservatives, who failed to maintain a majority, remain the largest party. Theresa May has confirmed that she will continue as Prime Minister and has this afternoon been invited by the Queen to form a government, working with Northern Ireland’s Democratic Unionist Party.
What can we expect now?
Very few details have been released. What we do know is:
- The EU’s chief negotiator, Michel Barnier, who will represent all the other 27 Member States, is keen to commence negotiations on a phased approach (see below) in earnest on 19 June – almost a year to the day on which the referendum was held. The phased approach was resisted by the government, which prefers to deal with all the issues together, a stance which reflects the wording of Article 50 of the Treaty on European Union.
- The talks will start on a fairly fractious footing. Due to purdah1 the UK was unable to enter into pre-negotiating scoping out talks which was viewed as obstructive behaviour by the EU. The EU and UK are entrenched in opposite positions on the discussion of, and agreement to, an exit payment of €100 billion (approx £85.8 billion).
- Where disputes arise between the EU and the UK, there is a question whether these should be resolved by the Court of Justice of the European Union (ECJ) – an interesting dynamic from the UK’s perspective.
What does this mean for you?
The vote of confidence the election has given the government is likely to see a ‘business as usual’ approach to the negotiations.
Businesses still need to plan and structure themselves without knowing the outcome of the negotiations.
For some regulated businesses contingency planning is already required by their regulators, for example banks, insurers, and designated investment firms engaging in UK/EU cross border activities are required to submit contingency plans to the Bank of England by next month.
In light of this, we maintain our advice that businesses should, and as in the above cases must, continue with their contingency plans, to include a review of:
- Opportunities and risks.
- Regulatory requirements.
- Passporting requirements.
- Employment issues.
- Contracts, including dispute resolution clauses; and commercial relationships.
The EU’s Proposed Agenda and the Timescales:
|Phase 1 from June – December 2017||Negotiations to include:
|Phase 2 December 2017 – March 2018||Negotiations to include:
|24 September 2017||The German election: this is likely to impact on the scope and structure of the talks, especially if Angela Merkel does not retain power.|
|29 March 2019||
|Post March 2019||There will likely be an implementation period before the new arrangements take effect.|