European Funds Comment: (Still) Planning for a No-Deal Brexit
30 November 2018
Gabriel Cooper-Winnick, Geoffrey Kittredge, John W. Rife III, Patricia Volhard, Simon Witney, John Young
Agreement by the European Union’s leaders of a Withdrawal Agreement on Sunday ought to have been a moment of certainty for European private equity and venture capital firms. In truth, of course, it would only ever have postponed the uncertainty, because the long-term future arrangements between the UK and the EU still have to be negotiated. But the Withdrawal Agreement includes a transitional period, and that would ensure a smoother ride into the next decade.
Unfortunately, however, the EU’s approval of the Withdrawal Agreement has had the opposite effect. As things stand, the UK Parliament looks likely to reject it on 11 December, and the EU negotiators now say that it cannot be re-negotiated. Sunday’s EU summit has therefore increased the likelihood of a disorderly, “no-deal” Brexit in March next year.
The sentiment in Parliament may yet change. Or, if the deal is rejected in the UK, the EU negotiators may actually be willing to look again at some aspects of it despite what they now say. Several other outcomes are also possible – including another referendum. But a no-deal Brexit, even if it still seems unlikely, is the default outcome if nothing else can be agreed. According to UK law and the EU treaty, the UK is leaving the EU on 29 March and it would take new legislation, and (probably) agreement from all other EU member states, to change that. Firms cannot afford to assume that will happen in time. They need to step up their preparations, or at least they need to check that they really can afford to wait yet another month before activating their contingency plans.