Brexit: a never ending story?

Tuesday, 15th of January will be a crucial day in what seems to become a never ending story regarding the Brexit. Leon Kanters, Brexit expert and partner of KPMG Meijburg & Co: “The Brexit deal will be brought for a vote to the House of Commons in the UK. When we believe the media it will become a clear defeat for the British prime minister May.“

Assuming the media is right and the deal between UK and EU will not be accepted by the House of Commons. What does this mean for trade between UK and EU? For sure another period of uncertainty.

No deal

Although the vast majority of British MP’s are against a no deal scenario it will be the most obvious outcome when the deal is rejected in the British House of Commons. Leon Kanters: “A plan B within 3 days after the defeat that reaches approval in the House of Commons seems to be very unrealistic. It will therefore be more logical to either withdraw the request of article 50 of the Lisbon Treaty (withdraw from EU) or to ask the EU member states to extend the period in order to avoid from both sides the undesired no deal scenario.”

Extension

The extension could be used for various reasons, a second referendum, new elections, but perhaps also to reconsider, based on the vote on 15th of January, certain Brexit topics. Leon Kanters: “As an example: does the desire to establish independent free trade agreements weigh up against the advantages of being part of EU’s customs union? Especially for the British production industry it is questionable whether that will be the case. A lot of manufacturers in the UK use EU components for their products. These components count together today from EU origin, but don’t count for British origin. It could therefore very well be that products that meet today’s rule of origin, when exported to for instance Mexico, don’t meet the same origin rule after Brexit. This might also be the case for products exported to countries for which the UK government has established an independent free trade agreement. The benefits of independent free trade agreements could therefore be less than expected.
Remaining in the EU’s customs union might be more beneficial for the British production industry.”

In short, uncertainty remains and Brexit will keep us busy for what it seems indefinite time. A never ending story…

Do you want to know more about what the consequences of the Brexit are for your business or how we can help you? Please feel free to contact our Brexit expert, Leon Kanters, or other specialists of our Brexit team.