Through our engagement with individuals and businesses across Wales, we’ve learned that you’d welcome early guidance from us. On this page you can find information on some of the most frequently raised topics and links to related support. We intend on updating this page on a regular basis, responding to any queries you have.
So if there’s any EU transition related issues you’d like information on, just drop us a line on our Business Wales Contact Us form.
Yes. The UK is the largest recipient of foreign direct investment in the EU and much of this is due to advantages that have little to do with its EU membership and are not impacted by departure. Factors which continue to make us a very attractive place for FDI as well as indigenous businesses to invest include:
- we have a very open economy, and it’s easy for foreign investors to own or start up a businesses
- having a very competitive tax and regulation system and are seen as a safe place to invest
- having deep capital markets and a large number of publicly-listed businesses
- the Welsh Government has direct contact with its businesses and entrepreneurs
For further information on how the Welsh Government helps foreign businesses invest in Wales visit the Trade and Invest website or call 03000 6 03000.
Yes. The UK will remain a member of the Single Market as long as it remains in the EU and the situation will not change until the UK leaves the EU. While it is not possible to predict what future trading arrangements will be, there are reasons to be optimistic as many non-EU countries, such as Norway and Switzerland, have very good trade balances with the EU, and being outside the EU may mean less onerous regulatory requirements for some UK businesses.
The UK will remain part of Europe, with the remaining EU states on the UK’s doorstep. High levels of trade took place before the Single Market and will continue after the UK leaves the EU.
Nothing changes for the moment. The UK remains a member of the EU and the UK economy is in a strong position. This position of strength will continue as the UK and the Welsh Government carefully help businesses manage change and exploit opportunities as the UK prepares to exit the EU.
The EU accounted for 44% of our exports and 53% of UK imports in 2015. This level of export has decreased in the last decade while the proportion of British trade accounted for by the rest of the EU has fallen, and non-European markets have become more important for UK exporters. The economies of countries like China and India are expanding more rapidly than EU countries and our exit from the EU may make it easier for the UK to trade with non-EU countries. We will keep you fully updated on future export opportunities.
Confidence is key to investment. Clearly the detail and planning behind an investment remains the most important consideration. Business Wales can provide advice, a mentor or support that may assist to assess your plans and proceed with confidence. Send us an enquiry, take a look at our Business Wales website or call us on 03000 6 03000.
Yes. Until the UK leaves the EU the rights of workers from other EU states currently employed in the UK, or looking to work in the UK, will not change.
The rights of workers from other EU states may be affected in the future. However, any changes to the principle of free movement, if made, are some way off and still too uncertain to cause radical alterations to recruitment strategies as yet.
The Legal Implications of leaving the EU
Those businesses that plan ahead for leaving the EU will be far better placed to prosper in the future. In this note we suggest some steps that you might wish to take to identify and manage risk in existing and new contracts.
Given that there will be economic consequences of some kind for most businesses as a result of leaving the EU, now may be the time for you to consider existing and proposed new contracts with customers and suppliers to identify risks (and opportunities) and to plan strategies for those trading relationships.
If you haven’t already, maybe it’s time to identify which of your contracts might be affected by leaving the EU. In particular, think about the following issues:
- Currency exposure - given exchange rate fluctuations, it should be a priority to identify those contracts where payments are made or received in a foreign currency or are pegged to a certain exchange rate.
- Liquidity and solvency - identify which of your customers or suppliers, on whom you have a material reliance, may be significantly affected by leaving the EU. You may wish to ensure that, wherever possible, you have adequate protections and contingency arrangements in place. This may, for example, involve a review of insolvency related termination rights. Also consider the consequences of termination, such as the existence and adequacy of your audit and retention of title clauses.
- Material adverse change - if you’re commercially exposed and a successful renegotiation is not on the cards, see if you have the benefit of a ‘material adverse change’ (MAC) clause. These clauses are typically found in M&A or longer-term sourcing deals and usually allow a party to terminate or to pursue a different pricing strategy. Similarly, if you find yourself in a difficult position, a widely drafted force majeure clause (which refers to acts of government, regulatory bodies or similar) might just provide you with the commercial leverage that you need, if only to force a renegotiation.
With new contracts, ensure that you carefully review the likely EU exit possibilities, especially where there could be a material impact on risk, revenue and/or cost, and assess whether you have adequate contractual flexibility and/or commercial headroom to allow your trading relationships to prosper. In particular, think about:
- Pricing mechanisms - in order to deal with the unknowns of leaving the EU, and to maximise competitiveness, you may need to adopt more sophisticated pricing mechanisms which expressly allow adjustments on the occurrence of one or more pre-defined events such as changes to the cost of compliance with regulatory requirements or costs related to changes in immigration laws.
- MAC or EU exit clauses - consider including a provision in your contract that enables you to terminate and/or to adjust pricing if one or more pre-defined events occur. Before you suggest this to your counterparty, do think about whether your customer or supplier might insist on a reciprocal right and, if so, whether, on balance, it remains appropriate to propose the provision.
- Territorial scope - whether you’re dealing with franchises, software licences or the exploitation of other intellectual property rights, think about the extent of the rights being granted or received within the EU, and what ability you have to protect or adjust the scope of grant and/or associated revenue flows and cost commitments.
- Exit planning: ensure you have adequate provisions to deal with an orderly and seamless exit.
- Intellectual property - contracts involving provisions dealing with registered trade marks or design rights, should be drafted to allow for additional UK registrations to be added to the scope of the contract.
2. Data Protection Law
In May 2016, the EU adopted a new data protection framework for its Member States in the form of the General Data Protection Regulation (GDPR). Replacing the Data Protection Directive from 1995, the GDPR, which provides a unified approach to data protection rules, will be directly applicable in all Member States as of the 25th May 2018 after a two-year transition period.
Whatever relationship the UK negotiates with the EU, the GDPR rules will be applicable to UK businesses.
It would be prudent to review your current data protection policies and structures so as to be prepared to abide by the GDPR rules when doing business in Europe after leaving the EU.
You may wish to consider the following, particularly if you outsource or provide outsourced services
- When tendering for new contracts that may have an expiry date past a likely EU exit, it would be prudent to consider the possibility that TUPE may not be around at that point - with the result that the incumbent provider will potentially need to redeploy or make its own employees redundant.
- Service providers may wish to review their business structure so they are better placed to cope without the automatic transfer of employees at the start and end of contracts.
- You may wish to review existing agreements for the provision of services, particularly those with many years still to run, to assess the impact of TUPE being repealed in the meantime.
4. Rights and documentation of EEA nationals
It would be prudent for you to check that your Prevention of Illegal Working processes and documentation are up-to-date to ensure a good relationship with the Home Office in the coming months and years.
5. Intellectual Property Rights
If you want protection within the UK as well as EU territories for a new trade mark application you should now consider applying for both a UK national mark and a European Union trade mark (EUTM).
IP licences and contracts
Contracts and licences with IP at their core (such as franchise, agency, distribution agreements, trade mark licences and co-existence agreements for trade marks) have the potential to be affected by leaving the EU, particularly if IP rights are licensed for “the EU” as a defined territory.
Any change in the territorial scope of the “EU” is not relevant for any short term licences or agreements which are less than 2 years in duration (as this is the minimum negotiation period between the UK and the EU after Article 50 is triggered).
For any existing agreements with more than 2 years to run, it is recommended that you should review the territorial scope and if necessary agree amendments with counterparties to provide certainty.
For any new licences or agreements which refer to the EU as a territory, it is recommended that the UK is specified as an additional territory for clarity.