The challenges ahead around Brexit
(27 March 2017)
Durham University experts outline the challenges ahead for the UK as it starts its exit from the European Union.
Brexit poses many challenges, according to experts at Durham University, with a number of immediate issues facing negotiators, such as around the rights of UK migrants in the EU, EU migrants in the UK, financial arrangements and the importing and exporting of goods and services.
The rights of migrants
“The challenges of Brexit are many, in all areas. One of the first issues to be settled, beside the UK financial contribution to the EU, concerns the rights of UK migrants in the EU and EU migrants in the UK.
“Whilst the issue might appear simple at first sight, there are a number of challenges, especially for pensioners and for economically inactive citizens, including to a certain extent students.
“For instance, migration of pensioners (a significant proportion of UK citizens living in the EU) is made possible by EU legislation that will no longer apply once the UK leaves the EU.
“Furthermore, even for workers and the self-employed there are challenges ahead: what will happen for instance in case of a change of circumstances? Will workers and the self-employed be able to retain their status, as is the case under EU law, or not? Will the threshold criteria for self-employment apply to EU nationals in the UK?
“In a way, residence rights are just the first (and easier to solve) problem; to find a satisfactory agreement in relation to all those accessory rights that are currently guaranteed by EU law, for instance access to welfare; exportability of benefits and so on, will be far from simple.
“It is debatable then whether the UK is in a stronger negotiating position in this respect.”
For further information, please see Professor Spaventa’s evidence to the Scottish Parliament on the rights of EU citizens in the UK and UK citizens in the EU post Brexit.
The Brexit process
“The challenges ahead are extraordinary as 40+ years of developing legal institutions are redrawn. It will be difficult for Parliament to do much more than figure out what Brexit means and how it is delivered with thousands of regulations to wade through.
“I am doubtful of a full break. The Prime Minister has claimed an intention to leave certain financial arrangements like the Single Market, but to remain in security and counter-terrorism European institutions. Time will tell if Brexit means more than some changes, but more fundamental changes.
“The government has had little more in its hand than a threat to walk away from talks without a deal - which they have made no risk assessment about, underscoring that this is not a realistic possibility - or bargaining away the rights of EU nationals to live and work in the UK which most in Britain oppose as a step too far. Whatever happens next, we'll be talking about Brexit and its implications for months and possibly years to come.”
Supply chains across European boundaries
“The repercussions following the triggering of Article 50 for the UK manufacturing industry will be understood only after the full details of any deal are known. Yet, what we do know is that a closely integrated supply chain, where there is an easy exchange of ideas, information and investment is likely to perform better. Because of this, supply chains in several sectors have been leading integration initiatives which have significantly contributed to the competitiveness of the UK manufacturing sector over the last few decades.
“Such initiatives have been facilitated by standardisation across various sectors over the years the UK has been a member of the EU. As a result, the risk of working in partnerships with customers and suppliers across European boundaries has been relatively low.
“As the UK is leaving the EU and the impetus for common regulatory frameworks decreases, there is a risk that in the longer term UK manufacturers will become less attractive partners to do business with.
“The good news however is that UK manufacturers have been very innovative, building significant capabilities in several sectors, which may be difficult to replicate elsewhere. As the negotiations are gathering momentum, and more information is becoming available, small and large manufacturers will be continuously assessing how these hard won capabilities will be affected by the new landscape. Thus, during this two year negotiation period every snippet of information will be used to evaluate the shorter and longer term impact.
“The bigger risk, therefore, is that as strategic decisions are being made, e.g. for the development of new products, there will be an increasing appetite to explore how moving operations elsewhere can protect this competitive position.”