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July 19, 2018

EC adopted a Communication outlining the ongoing work on the preparation for all outcomes of the withdrawal of UK from EU. On March 30, 2019, UK will leave EU and become a third country. This Communication is to be seen in the light of the call of the EU27 Leaders to intensify preparedness at all levels and encourages all stakeholders that may be affected by the withdrawal of UK to take the necessary preparedness actions.

This will have repercussions for citizens, businesses and administrations in both the United Kingdom and the EU. These repercussions range from new controls at the EU's outer border with the UK, to the validity of UK-issued licenses, certificates, and authorizations and to different rules for data transfers. As there is still no certainty that there will be a ratified withdrawal agreement in place on that date, or what it will entail, preparations have been ongoing to try to ensure that the EU institutions, member states, and private parties are prepared for the withdrawal of UK. Even if an agreement is reached, the UK will no longer be a member state after withdrawal and will no longer enjoy the same benefits as a member. Therefore, preparing for the UK becoming a third country is of paramount importance, even in the case of a deal between the EU and the UK. 

EC has published eight notices in the area of passporting rights and contract continuity. ESAs have provided extensive additional guidance to national competent authorities and to market participants through a series of Opinions. EC has also proposed modifications to some of the current supervisory arrangements to cater for potential financial stability implications following the withdrawal of the UK. The co-legislators are encouraged to adopt these proposals as rapidly as possible. Given the potential implications for financial stability, a technical working group, co-chaired by BoE and ECB, has been set up and is meeting regularly with a focus on risk management in the period around March 30, 2019 in the area of financial services. Additional authorities are participating in analysis on an issue-specific basis. The group will report on its work to EC and the responsible authority in the UK.

Institutional matters and budgetary issues are another area where EC is screening the needs and in some cases has already taken the necessary steps. An example is the relocation of EBA, which is London-based and will move to, and operate out of respectively, Amsterdam and Paris, as of March 30, 2019. As per the Communication, preparing for the withdrawal of UK is not only the responsibility of EU institutions. It is a joint effort at EU, national, and regional levels and it also includes economic operators and other private parties—everyone must now step up preparations for all scenarios and take responsibility for their specific situation.

 

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Keywords: Europe, EU, UK, Banking, Securities, PMI, Insurance, Brexit, Withdrawal Agreement, Third Country, EC

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