January 16, 2020 - Today, the LSTA hosted a webinar, “Brexit: Britain to Withdraw on January 31st”, presented by Clifford Chance Partner, Simon Crown. The UK has been stuck in a holding pattern since the 2016 Brexit referendum, but that was broken by the results of the UK’s General Election, which took place on December 12th, when the UK’s Conservative Party were returned to government with a strong majority in the House of Commons. The election’s results made it much more certain that the legislation needed to withdraw would finally succeed. In fact, Prime Minister Boris Johnson’s Withdrawal Agreement Bill made its way through the House of Commons last week and is expected to take effect and be ratified by the EU Parliament by month’s end. There is, therefore, a high likelihood that both processes – the UK’s and the EU’s – will be timely completed this month so that at 11pm on January 31st, the UK will formally withdraw from the European Union. Exit day will no doubt be a day of happiness for some and unhappiness for others in the UK (48% still oppose Brexit) but even Big Ben will not ring its bells on that day (it is still under repair). Exit Day should only be seen as the end of the first chapter in this saga, for the UK must then enter serious trade negotiations which will be handled on a sector by sector basis – with the fisheries industry, steel industry, and automobile industry, etc, all being hammered out separately. It will be interesting to see how this plays out, for the EU will be limited in its negotiations by the presence of MFN clauses in its existing free trade agreements – what they offer to the UK must also be offered then to, say, Canada. The EU will, therefore, tread very carefully as these two great economies seek a way to reconnect. Fortunately, for those working in financial services the remaining 11 months of this year will be like a legal standstill period, with the status quo essentially frozen. Thus, for example, for those in financial services who may be relying on passporting rights or thinking about the passporting rights of their counterparties, nothing will change this year. At a practical level there will be many new bits of legislation which will need to be digested over the coming months. Click here for the webinar replay.
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