The nation has voted for Brexit – what you need to know

United Kingdom

This article was produced by Nabarro LLP, which joined CMS on 1 May 2017.

The biggest problem for UK business today is that no one knows exactly what will hapen next. Together with that every organisation will want to plan for the eventual exit from the EU. We have outlined the key areas which we think should be considered to provide your business with maximum protection and flexibility:

Day-to-day trading

There is likely to be a fairly sustained period of market volatility over the next few months. The impact on exchange rates and consequently trade may well continue throughout the exit negotiation period and a review of Forex risks should be undertaken as soon as possible.

On exiting the EU there may be a range of consequences, from exposure to EU customs duties to loss of mutual recognition of standards, qualifications and authorisations. These are likely to be most strongly felt by businesses in sectors such as life sciences, cosmetics and foodstuffs.

Similarly, EU free trade deals with other countries which we currently benefit from will be lost. The negotiation of bilateral agreements on similar terms is likely to be drawn out and the outcome uncertain. Businesses should therefore consider introducing terms into long-term sale and supply agreements particularly, to allow for price adjustments in the event of any additional costs.


Uncertainty in the market over the next two years may lead to lenders being less willing to lend and the cost of borrowing may well increase. Longer term, if the cost of compliance with both the UK and EU regulation increases then lenders increased cost provisions in finance documentation may kick in. Finance documentation should be reviewed to understand lenders’ ability to adjust interest rates and collapse loans in the event of adverse credit markets.

Where facilities are due to mature or likely to be refinanced in the ordinary course around the time of the UK’s actual exit from the EU, given the likelihood of further market uncertainty at that time, borrowers should consider whether it would be better to accelerate those transactions within the two year period leading up to the actual exit.

Competition, procurement and "state aid"

While substantive competition law and merger control are not expected to change, large pan-European mergers are likely to be impacted by enforcement and jurisdictional questions. UK businesses could find themselves having to file both to the Competition and Markets Authority and the European Commission, causing delays and added cost.

Similarly, the impact on substantive procurement rules is unlikely to be immediate. However, suppliers' cross-border rights of access to public tenders may potentially be affected depending on how agreements on access to public tenders are negotiated.

In relation to state aid, the UK may fall outside the EU's state aid "level-playing-field" enforcement regime which controls the granting of subsidies or other advantages by Member States. Depending upon the Agreement that the UK Government negotiates, it may no longer be subject to controls in granting preferential treatment to specific companies or introducing a selective tax regime. The World Trade Organisation rules on anti-dumping and anti-subsidy, however, may apply (assuming the UK gets full WTO member status in the intervening period) – as might the EU trade protection rules.

Financial services

The implications of the leave vote will be amplified for the heavily regulated financial services sector.

For example, under the current EU system, EU Investment Managers wishing to provide their services across Europe must first become authorised by a member state regulator, before applying for a "passport" allowing them to manage and/or market their products across the EU. An un-negotiated Brexit would relegate UK Investment Managers to the status of "third country" managers. This may mean they would need to obtain new licenses or to establish operations in an EU member state.


As with all EU legislation it remains to be seen what the Government will choose to enshrine in UK law, amend or get rid of. It is, however, unlikely that it would repeal current EU employment legislation because much law in this area is commonly accepted across most western jurisdictions. However, some of the EU legislation has proved unpopular and may see change. These include:

  • free movement of workers;
  • equal pay for agency workers;
  • accrual of holiday on maternity leave;
  • the 48-hour working week; and
  • TUPE.

How can we help you?

We’ve put together a Brexit Contingency Group including lawyers with proven experience of supporting companies in fast-moving, challenging circumstances. You may find the materials UK Real Estate and Brexit Sector Focus useful in navigating some of the uncertainty ahead. For more information please contact your usual Nabarro contact or contact Alasdair Steele, head of the Contingency Group.