Preparedness for the United Kingdom’s exit from the European Union

Negotiations

On 29 March 2019, the United Kingdom will leave the European Union. Negotiations on a withdrawal agreement are in progress. The agreement covers the terms of the withdrawal, such as post-Brexit citizens’ rights, the UK’s commitments already made to the EU’s multiannual financial framework, and the operation of the EU’s outer border. A joint political declaration on the framework for a future EU-UK relationship will be annexed to the withdrawal agreement. The goal and intent of both sides is to reach agreement during October–November 2018. 

Withdrawal scenarios

There are currently four different scenarios for the UK's withdrawal:

  1.  agreement is reached on a withdrawal agreement and the withdrawal agreement is then concluded and ratified by 29 March 2019;
  2. the withdrawal agreement is not concluded and ratified;
  3.  the two-year period reserved for negotiations is extended by unanimous agreement of the EU-27 Member States and in agreement with the UK; or
  4.  the UK cancels its exit from the EU and withdraws the withdrawal notification it had issued to the EU, for example as a consequence of a referendum.

In the current circumstances, preparations must be made particularly for the first two outcomes

  • If agreement on a withdrawal agreement is reached during autumn 2018 and the withdrawal agreement is concluded and ratified by 29 March 2019, the transition period will then begin. The transition period will last until 31 December 2020. During the transition period, the UK will comply with EU law and the EU’s international agreements, and will be part of the single market and customs union as before, but it will no longer participate in the EU’s decision-making or in the activities of EU institutions.
  • If no withdrawal agreement is made or the withdrawal agreement is not concluded and ratified before the withdrawal date (29 March 2019), the transition period cannot begin. In this case, the application of EU law (including international agreements binding on the EU) to and in the UK would cease on 30 March 2019.  This means that the UK would be an external country to the EU (a ‘third country’), with no special arrangements. This would be a withdrawal without an agreement, i.e. a no-deal Brexit.

In such circumstances, it is possible that

  • EU citizens would not be accorded any special arrangements in the UK, nor UK citizens in the EU.
  • In regard to customs clearance at the border, the EU would apply third-country customs regulations and tariffs, including inspections and monitoring related to customs regulations and health and plant protection standards. These measures could cause significant delays, for instance to road transport and at ports, and therefore increase costs for businesses.

In both cases, the UK's withdrawal would lead inevitably to repercussions for citizens, businesses and administrations in the UK and the EU. The changes will take place either on 30 March 2019 (in a no-deal withdrawal) or 1 January 2021 (if a withdrawal agreement is concluded and ratified).

How can businesses prepare for Brexit?

Preparing for Brexit is a joint task that has to be performed by the authorities and also by the other stakeholders involved. It requires steps to be taken by EU institutions, national and regional authorities, businesses and citizens. The economies of Member States are closely intertwined in the single market as a result of, for instance, business supply chains and cross-border services. Hence, the UK’s withdrawal, especially in a no-deal situation, could have a considerable impact on economic operators.

Preparedness measures cannot prevent the changes resulting from the UK’s withdrawal, but they can be used to help mitigate the impact. The necessary decisions and administrative measures must be ready before the withdrawal takes effect on 30 March 2019 if disruption is to be avoided.

Key considerations for businesses in a no-deal Brexit include:

  • Obligations in supply chains. Businesses have various obligations by law that are related to the position of the company in the supply chain (e.g. manufacturer, importer, wholesaler, etc.). These obligations may change.
  • Certificates, licences and authorisations. Authorisations issued in the UK will not necessarily be valid after Brexit. It may be necessary to apply for entirely new certificates, licences or authorisations, or to exchange them for ones granted in the EU.
  • Customs, value-added taxes and excise duties. Post-Brexit, trading with the UK will change considerably. Businesses should familiarise themselves with the EU procedures and rules for trading with third countries.
  • Rules of origin. Post-Brexit, companies will no longer be able to count on UK-produced inputs being EU-internal. Products from the UK will have to be treated as a ‘non-originating’ production inputs.
  • Import and export prohibitions. There will be restrictions at EU borders on the import and export of certain products from and to third countries. Post-Brexit, these rules will apply to goods imported from and exported to the UK.
  •  Transfer of personal data. Businesses must prepare for the possibility that, post-Brexit, terms concerning the transfer of personal data to the UK could change.

Each ministry is responsible for Brexit matters in respect of its own branch of government.

Inquiries:

At the Ministry for Foreign Affairs, Terhi Bunders (general Brexit coordination) and Kristiina Kauppinen (trade-related matters); firstname.lastname@formin.fi.
At the Prime Minister's Office, Johannes Leppo and Silja Pasanen; firstname.lastname@vnk.fi.