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For more than 9 months it seems Brexit has been one of the first things to be discussed at meetings with everyone wanting information on how this will affect them, their business and their lifestyle. Over the next two years it will take over the political landscape and, in my mind, the full story will take at least a decade to play out.
With the main business focus of the IF Workforce Group being cross-border staff engagements, I seem to have taken questions from all four corners of the globe. I am no authority on the impact of Brexit but having attended many conferences, which included this subject, I felt it was worth putting my thoughts into writing.
I see that within our professional arena, Brexit will impact three areas:
The EU is a wonderful anomaly within Geopolitical circles because it allows workers from 28 countries to work and live in any of those countries without any barriers. The only exception to this is for new entrants, such as Croatia, who have to adhere to some restrictions in initial years. Brexit means that, from April 2019, the UK will fall outside the laws on the “Freedom of Movement For Workers”, one of the four key principles of the EU. If negotiations between the UK and the EU on this subject are unfavourable then UK citizens will require work and residence permits to live overseas, inside the EU. The same will be said for EU nationals living and working in the UK.
Currently there are 3 million EU nationals living in the UK and 1 million UK national living in the EU. At this early stage no one can be certain how things will develop, however, the integration between the opposing states is so high that it is hard to believe that both parties won’t reach a satisfactory agreement by 2019, even if it is just an interim one. It is difficult to envisage that decades of EU integration can be undone within 24 short months so, in my opinion, expats can feel safe in their surroundings for now.
Whatever happens this has the potential to have a profound impact on how cross-border talent will need to be managed across the UK and EU. This means I will be paying particular interest to any developments and will report back on this with future posts.
Put simply, this means that financial institutions can move money and/or provide financial services across the EU without having registered entities in all countries. As it stands Brexit will mean that the UK will lose this benefit come April 2019, making it harder for UK registered business to trade with EU partners.
Again, it is too early to speculate how negotiations will pan out but, already, there has been an increased level of investigative activity towards Ireland and Germany from London-based financial institutions. What this shows is, should the UK not negotiate a way around this, these institutions could register new entities in one of these two countries. Keeping them within the EU and ensuring they do not lose their “passporting” rights.
Our Group is perfectly placed to assist whatever happens over the next 24 months. We have existing businesses registered in the City of London and Dublin, as well as supporting hundreds of contractors in Germany. Overcoming cross-border technicalities is our bread and butter and we look forward to assisting our clients during this turbulent time.
Professional services will not escape any pain here but it is nothing compared to the AgriFood industry, who are expecting additional tariffs to the tune of 40% being added to their invoices. The main area of concern for our industry will be VAT since this sales tax is controlled by EU wide legislation. The UK coming out of the EU means that, come April 2019, UK companies will have to operate with new VAT laws. This could mean their services to EU based customers are more expensive than their EU competitors.
Of course, this is another area that will be addressed in time and I will continue to monitor and comment on any changes. That said, we do not fear any outcome as our existing business infrastructure means we will have operations inside and outside of the EU. Yes, Brexit will increase hurdles when operating between the UK and the EU but we are well placed to handle it all. Our knowledge and experience will ensure our clients are operating in as efficient way as possible, whilst adhering to all of the new laws and legislations brought about by Brexit.
Hopefully this has provided you with some valuable insights into what is the most important case of “known unknown’s” faced by the world today. Brexit has, without a doubt, brought with it uncertainty but the IF Workforce Group will continue to keep abreast of all developments to ensure our clients can navigate their way through this.