Brexit: essential policy highlights for business
On 26 August 2016 the House of Commons Library published their Brexit briefing paper; a lengthy document titled ‘Brexit: impact across policy areas’. The paper… Read more
On 26 August 2016 the House of Commons Library published their Brexit briefing paper; a lengthy document titled ‘Brexit: impact across policy areas’. The paper considers the vast possible impact that Britain’s vote to leave the EU may have. We take a look at the government’s conclusions in key areas, alongside the predictions made by Kemp Little in the immediate aftermath of the vote.
It’s well-known fact that EU membership in itself attracts foreign investment to the UK because, “it allows multinationals based outside the EU to access EU markets without facing tariff and non-tariff barriers.” On the face of it therefore, the vote to leave will have a negative impact, however, as the paper explains there is a silver lining that accompanies post Brexit UK. It will have the potential freedom to establish its own more favourable regulatory regime that attracts overseas investment, an opportunity that has escaped the UK since the Lisbon treaty came into force in 2009.
The theme of regulatory reform in this area after our vote to leave, was picked up on by Kemp Little in our ‘Brexit: what lies ahead’ webinar. While the paper reiterates our view that data protection law in general is unlikely to change, there is now freedom to modify and create a more merciful version of the incoming General Data Protection Regulation (GDPR). This could cause complications for a UK company that has customers or business in the EU, but on the other hand, could entice cloud providers and other data storage companies to move their businesses to the UK.
Kemp Little identified IP rights after Brexit to be a particular area of concern, with a genuine worry that the impact of leaving the EU on trademarks, could lead to the UK IPO quickly becoming swamped with applications to ensure that EU marks remain protected in the UK. The paper attempts to instil a sense of calm and quotes the IPO statement from 2 August 2016 which emphasises that, “nothing will change until the negotiations to exit are concluded. Despite this, companies are best advised to act quickly and ensure that their IP is adequately protected in the requisite jurisdictions.
The paper highlights that a breakaway from the EU will now afford the UK government more freedom to modify tax laws and in particular VAT reliefs. We highlighted in our article, ‘The Effect of Brexit on UK Digital M&A’, that VAT is too important to the UK government for any drastic changes to occur, the briefing paper substantiates this argument by clarifying that VAT, “account[s] for around 17% of all government receipts” and therefore changes to tax and VAT reliefs in particular are unlikely.
The overriding theme of the briefing paper, as expected, is that we have to be patient. No immediate or drastic policy changes have been announced and the true extent of any future impact of Brexit is heavily dependent on how negotiations, which are set to be prolonged, pan out. It is, however, worth considering that much of the ongoing speculation as to which ‘model’ the UK will adopt to forge its future relationship with the EU, fails to take account of the possibility that as Theresa May stated on 20 July 2016, “[it may] not necessarily be based on any of the models that already exist.”
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