The British Parliament voted against the Brexit withdrawal agreement which outlined the terms of the UK’s departure from the EU. The result does not come as a surprise to many, as it was highly speculated that the Brexit withdrawal agreement would not pass, with at least 70 of her Members of Parliament announcing publicly that they did not support the deal. Without a secure agreement and with the Brexit date looming closer, uncertainty for the future is at its highest.
What’s next after the Brexit withdrawal agreement vote?
A vote of no confidence will be held tomorrow, after which a number of scenarios are possible. Gaining momentum is the option of postponing the Brexit date from the 29th of March to July, whilst other possibilities include a second referendum, a general election, as well as a government takeover may be possible amongst other options.
With the EU reportedly stating that they are not willing to renegotiate an agreement, a no deal Brexit might still be on the table. Should this happen, the UK will go on to leave the EU without any set terms, and EU membership will come to an abrupt halt on the 29th March 2019, undoing any standing agreements with the EU after 45 plus years of membership. With no transition period, many fear that the country would be thrown into uncertainty. Questions regarding what would happen to UK citizens living in the EU and vice versa, as well as concerns regarding the 310-mile border between Northern Ireland and the Republic of Ireland, have as yet remained unanswered.
Effects of Brexit on UK-based Business Industries
Both the Bank of England and the Financial Conduct Authority shared concerns that businesses are not prepared for a no-deal Brexit and that the country may incur severe setbacks. The Bank of England suspects that the UK may fall into a recession as the pound could fall by 25%, property by 30% and the UK economy by 8%. Small and medium enterprises are expected to suffer due to the effect on the banking industry, and questions have also arisen surrounding the UK’s stance as a leading financial centre, as withdrawal from the European single market is said to affect up to 10,000 jobs in the UK financial industry. Pending fears of a hard Brexit, many companies are looking to safeguard their business and relocate to an EU country for guaranteed access to the EU single market and to maintain their passport rights. It is reported that already a number of big companies such as Muji and Panasonic are considering relocating to the EU.
As for trade, the UK would have to adhere to World Trade Organisation rules when trading with the EU, possibly setting tariffs on goods, requiring custom checks and long border checks, all of which would affect international trade and prices negatively. This framework would also eliminate any special trade relationships between the UK and the EU.
Car manufacturers with plants in the UK are apprehensive of what would happen should a no deal Brexit occur. Alarm that Britain’s manufacturing industry is under threat is increasing as companies raised distress regarding delays and suspended production in UK plants, as well as loss of revenue and increased production costs. Industries with trade rules created under EU regulation such as radioactive materials and aviation would also be left without clear cut regulations.
The aviation market is in fact attempting to secure transport connectivity, industry access as well as the continued verification of licenses and other important documents amongst the EU.
Similarly, pharmaceutical organisations have raised a number of concerns mainly surrounding the ability to freely import and export pharmaceutical products, to maintain financing for research, to participate in EU clinical trials, and to access databases.
Malta: A Pro-Business Jurisdiction within the EU
Malta has been on the radar for many businesses who have been eyeing Malta’s beneficial trade law and strategic geographic location, not only as a member of the EU with access to the rest of the member states, but as a central connection to Africa and the Middle East. The pro-business jurisdiction offers an EU complaint legal system and attractive tax regulation that has seen leading companies in industries ranging from pharmaceutical to insurance, banking to aviation, as well as manufacturing, relocate to Malta.
This is in part with Malta’s initiative to embrace innovative sectors whilst other countries have rejected them. Malta was the first state to regulate blockchain and cryptocurrencies, earning the title of the Blockchain Island in 2018. Malta has seen a number of blockchain organisations open firms in Malta strengthening its position as a financial leader, a stance which has also seen Malta thrive within the insurance sector. Pharmaceutical organisations too have seen Malta as an apt alternative to the UK due to legislation that protects patent holders and allows for the of implementation of clinical research.
Chetcuti Cauchi Advocates
At Chetcuti Cauchi, our experienced team and relocation professionals have already helped a number of businesses relocate to Malta from the UK. With 15 years’ expertise in company formation, we make certain that each firm complies to Maltese financial and corporate regulations, and have experience in assisting transaction from start-ups all the way to multinational corporations.
