In the coming weeks, the Government is expected to trigger Article 50 to formally start the process that will result in the UK leaving the European Union. Whilst there has been a great deal of focus on the complexity of the forthcoming negotiations, little attention has been paid to the practical work that will need to be done to amend UK legislation which derives from EU law – and also to rework EU law which may need to be changed as a result of the final agreement with the UK.
To give some idea of the scale of this latter challenge, the European Parliament believes that there are 20,833 EU laws and rules which will need to be scrutinised, as well as the various constitutional treaties, protocols and declarations. With regard to financial regulation alone, 16 pieces of pending legislation in banking, capital markets and taxation have been identified that could require redrafting. Thousands of UK businesses who do business with the EU and vice versa could be impacted.
All of this is a Herculean task that will take years – much longer than the two years of the Brexit negotiations. In the UK, the Government is to introduce ‘the Great Repeal Bill’ which will provide a mechanism for grandfathering EU law into UK legislation until such time as new laws can be passed. And whilst this is all going on, businesses will be seeking to trade and contributing to economic prosperity.
Brexit is already creating uncertainty amongst businesses who, as ICAEW’s Business Confidence Monitor has revealed, are putting off long term decisions on capital investment, R&D budgets and staffing.
I think we need to be doing more to help businesses plan for their long term future.
Firstly, as far as is possible, I would like to see the UK Government emphasise the need for continuity for businesses once Brexit takes place. There is of course a great opportunity for the UK post Brexit but in shaping this, Government should ensure that as legislation is redrafted or repealed, the regulatory impact on business is co-ordinated. This will help avoid the situation where business has to adapt to multiple regulatory changes at the same time – as has happened in recent years.
Secondly, it would be useful to understand if the necessary changes to EU legislation will be primarily to remove references to the UK or if more material amendments might be required. That way, businesses on both sides of the channel will start to be able to plan with greater certainty.