European Union: There Is No Such Thing As A Hard Brexit

Last Updated: 11 June 2019
Article by Elias Neocleous & Co LLC

Most Read Contributor in Cyprus, July 2019

The IBSA (International Business Structuring Association) Brexit discussion meeting at Close Brothers Asset Management on Thursday, 30th May, was a fascinating insight into the legal, political and economic consequences of Brexit.

Malcolm Dowden of Womble Bond Dickinson started the meeting by explaining the UK legal issues involved and how a hard Brexit is not only possible but actually the default position as of 31 October 2019. This is particularly likely now that Parliament and the Government have virtually given up resolving the genuine concerns for business and is fast embarking on the summer recess. Indeed a no-deal Brexit becomes an unfortunate locomotive heading towards a precipice.

Malcom gave some examples of how the absence of any resolution to the impasse would affect business. For example, with a no-deal Brexit, GDPR personal data handling after the UK departure means that a data processor located in the EU would not be able to rely on EU "model clauses" to transmit relevant data to a controller in the UK. Regulatory standards in various different industries may vary and although the UK has currently adopted EU regulations, these may change as the UK seeks to maximise its attraction as a 'Singapore' type independent power house economy.

However, amongst the doom and gloom, there are some encouraging signs for business. It would seem that there is a strengthening in supply chain recognition where large companies are getting to know their SME suppliers and customers and helping them with customs procedures and reliefs for the first time. This vertical integration of systems to help those with limited resources may lead to improved relationships, cost savings and potentially a greater competitive edge.

Nikos Korogiannakis of Elias Neocleous & Co LLC then presented the European view on the legal and political issues of Brexit. In summary, he said that public opinion had lost interest in Brexit (much as it has in the UK), and that the UK itself does not seem to have participated in any new EU regulations since 2017. For example, the EU Regulation on Investment Funds in May 2019 did not have any contribution from the UK at all. So in a way, Brexit has already happened, and now we have to work out how the EU and UK will work together in the future!

Nikos commented on the legend that the UK will become the new 'Singapore' of Europe, but suggested that with EU legislation remaining as the status quo for probably a decade, such a hope may miss out on a generation. But on a more positive note, EU member states do not believe that a no-deal Brexit is a reality. Indeed, there is probably no such thing as a no-deal, since although a deal may not be reached by 31 October 2019 (after which WTO rules will apply for a limited period of time), the EU and the UK will work together in creating a new deal which accepts what will then be the status quo. Taking the banking industry as an example, 78% of M&A activities in the EU is undertaken by UK banks, whilst 90% of EU hedging risks is undertaken by UK banks. Indeed, UK banks earn 25% of their total revenue from the EU, and therefore the inter-relationship between the UK and EU cannot be denied with a no-deal. A deal will indeed be reached to benefit both sides, and this applies to all regulatory activities such as GDPR mentioned by Malcolm, to tariffs, movement of labour and financial contributions towards what is likely to become some form of customs union to prevent a hard border in Ireland, an issue which appears to be as important to the EU as to the UK.

Nikos then presented a well-known slide prepared by Michel Barnier highlighting the red lines imposed by Theresa May on the EU in her unhappy negotiations with the EU. These red lines included no bowing to the jurisdiction of the European Court of Justice, no free movement of labour, no substantial financial contribution from the UK to the EU, regulatory autonomy and an independent trade policy. These demands immediately ruled out any of the existing agreements that the EU has, for example with Norway or Switzerland, and left only a Canada (or Korea) type agreement which could be entertained by the EU. However, such a Canada plus agreement does have tariffs even though some technical barriers to trade may be removed with such an agreement. If tariffs are applicable, then the hard border problem in Ireland will still apply.

In summary, therefore, there could be no third solution, and the only deal that could be entertained would be either a customs union or an acceptance of a hard border. Besides Northern Ireland and the Irish Republic refusing to accept a hard border, one cannot rule out the risk of Scotland declaring UDI and becoming independent from the UK. Indeed, with its desire to remain in the European Union, one can hardly blame the Scots for their continued pursuit of independence which could bring about the disintegration of the United Kingdom.

Isabel Albarran of Close Brothers Asset Management then discussed the potential economic consequences of Brexit, deal or no-deal. To date, Isabel commented that Brexit had not had a devastating effect on the UK economy, in part because record-low unemployment, resulting in strong wage growth, has fuelled consumer spending. However, corporate investment in the UK has suffered, which may hinder productivity growth. Given the high weighting of globally-exposed businesses in the UK equity index, Brexit is but one factor for these companies, for which the impact on the global economy of slower Chinese growth and the Sino-American trade war may be more relevant.

Roy Saunders , Founder & Chairman of IBSA then summarised his interpretation of the meeting and what might happen to resolve the impasse:

''Mentally, Brexit has already happened in both the UK and the EU and a no-deal by 31 October 2019 is extremely likely, given the limited time available'', said Roy. ''Moreover, in the absence of a cross party agreement between the Conservatives and Labour, a customs union deal is unlikely. This means a hard border with Northern Ireland is inevitable in the short term – unless (and this is my hope) a Churchillian or Thatcheresque strong politician stands up within the Tory party and revokes Article 50 on the basis that the Brexit no-deal has been rejected by Parliament and is not what the majority of the public wanted when voting in the June 2016 referendum. A general election could then be called where parties define exactly what they will accept as a Brexit arrangement with the EU and a new round of negotiations will then ensue with the EU. This is likely to result in some form of customs union to benefit trade for the French agricultural industry, the German car industry, and all the other EU countries including the UK''.

Roy concluded the meeting by thanking the speakers Malcom, Nikos and Isabel for their excellent contributions to this IBSA discussion, and Close Brothers Asset Management for hosting the event.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions