Brexit. Heard of it?

Claire Williams | July 29, 2019

Of course you’ve heard of Brexit. It’s been a global headline since the United Kingdom (UK) announced their decision to leave the European Union (EU) back in 2016. In this post, we’re going to highlight how the implications of Brexit span far beyond the UK and the EU, and how organizations can be prepared for these immediate changes.

Mikkor, Arno. “Boris Johnson.” Flickr. September 8, 2017. www.flickr.com/photos/eu2017ee/36928363842

With the recent departure of Prime Minister Theresa May, there’s been a lot of speculation as to what the future outcome of an-already-delayed Brexit will be. On July 23, 2019, Boris Johnson was named the new Prime Minister and is now tasked with completing one of two Brexit options. To recap: 

  1. No-Deal: Brexit moves forward as soon as possible by October 31, 2019 with no renegotiations. This means there would be no 21-month transition period and the UK would have to immediately respond to several changes, including:
    • Reverting to World Trade Organization rules on trade and face the EU’s external tariffs. Manufacturers would likely start moving operations to the EU to avoid the delay in product coming across the border.
    • The UK and EU will be free to set their own immigration controls. It’s still unclear what will happen to the 1.3 million Britons living in the EU and 3.7 million Europeans living in the UK in regard to their rights to live and work.
    • The UK will no longer have to follow the European Court of Justice but would still be bound by the European Court of Human Rights (non-EU body).
    • The UK will not pay their £13 billion EU budget contribution but will also lose out on those subsidies.
    • The Irish border issue will remain unresolved and face pressure to enforce customs and immigration controls.
  2. Renegotiate: EU agrees to renegotiation and then depending on that, there are multiple outcomes.
    • New deal struck with the EU
    • Another vote
    • Brexit delayed past the October 31st deadline
    • Brexit cancelled

Johnson is now on the clock with a little over three months to renegotiate a deal for Brexit. He’s also threatened to leave if one is not reached. It’s also worth noting that as of July 28th, 2019, the government is working on the assumption of a no-deal Brexit.

Either Brexit decision will bring immediate and significant changes to organizations in the UK, the EU and the entire global economy with the sudden introduction of secure borders and more restricted trade. If organizations also have agreements or contracts that are set to expire after Brexit takes effect (depending on the status of further delays), there could be even more changes and consequences. Since there is a lot to unpack about Brexit’s impact, we’ll give you the cliff notes version.

All agreements with UK and/or EU companies will need to be scrutinized, however this will become even more necessary depending on the new Prime Minister’s decision of ‘Deal or No-Deal’ Brexit. Regardless, there are several implications organizations are already starting to prepare for.

The first significant impact will be on the current legal and regulatory sphere. Companies around the world that do business in the EU and/or UK may find that language in their agreements changed or no longer valid because of the sudden shift away from EU acts and laws. Changes in law due to the UK leaving will have to be quickly adjusted in existing agreements.

The second significant impact would be around currency rates, causing fixed rates in agreements to be altered.

The third significant impact involves how the UK and EU borders, customs, and trade policies could change. Organizations with business in Europe will need to quickly review and re-structure agreements depending on these new regulations.

As with any major regulation change (take LIBOR for example), there will be a need to review and re-paper enormous amounts of contracts and data to see where exactly this language is located and how it could be affected.

Heretik’s Brexit use case focuses on understanding where and what the effected items might be and the ability to re-paper thousands of quickly agreements with new language. Want to learn more about how Heretik is helping organizations prepare for either Brexit? Click  below to schedule a demo!

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CLAIRE WILLIAMS

Claire is a Marketing Coordinator at Heretik. She recently graduated from Miami University Ohio with a double major in Journalism and Mandarin Chinese. Prior to Heretik, Claire worked at Amdur Productions and for Miami University College of Arts and Science.​