On June 23, 2016, something that many people around the world deemed “unthinkable” finally happened: the UK voted to leave the European Union, with “leave” winning out 51.9% to 48.1%. Since that day, Brexit and its impact on everything from trade to visas, taxes to transportation, has been endlessly discussed in morning papers, on nightly news programs, and just about everywhere in between.
Recent discussions have turned to the idea of a “Soft Brexit,” which essentially allows the United Kingdom to remain a part of the European Economic Area (EEA), but still allows it to make various deals without the buy-in of the complete European Union. Similar situations have happened in the past, with Norway being perhaps the most prominent example.
A “Hard Brexit,” on the other hand, would result in the UK becoming completely independent of the EU in every conceivable way—including economically. Whether or not a Hard Brexit will occur remains to be seen. But one thing is for sure: a so-called “Soft Brexit” has a number of important implications for the UK and, indeed, the world, that are certainly worth exploring.
Breaking Down Brexit: What You Need to Know
A “Hard Brexit” comes by way of the various limitations it places on companies that have already chosen the United Kingdom as their European hub, as well as UK companies. For many, the decision to establish a presence in the UK was made based on the UK’s location and its ease of doing business with other countries in the region. For organizations that have already expanded, that benefit may evaporate almost instantly upon a “Hard Brexit.”
Likewise, a “Hard Brexit” would change immigration policies dramatically, potentially making it very difficult to bring talent into the country from elsewhere in the European Union. In the end, both issues may likely result in fewer companies choosing the United Kingdom as their European hub in the future. And, as of October of 2018, a “Soft Brexit” is actually preferred by the majority of the public in the United Kingdom. Currently, the most extreme version of a “Hard Brexit” has the support of about 8% of the country’s 65 million citizens.
To get an idea of what a “Soft Brexit” might look like, we must again look to the closest: Norway. Norway currently is not a member of the EU, but has full access to the European single market via its membership in the EEA. This would significantly minimize disruptions to trade, to global supply chains, and to businesses across the board. The UK would still be bound by all EU rules and tariffs, and would lose any say in creating them in the future.
A Possible Soft Brexit on the Horizon
Regardless of a Hard or Soft Brexit, the transition period is still set for between March 29, 2019 and December 31, 2020. During this time, businesses will need to prepare for the forthcoming post-Brexit agreements between the UK and the European Union. The UK will be free to forge its own trade deals with countries around the world, although they won’t be able to go into effect until January 1, 2021. But again, this transition period is only possible if both the UK and the EU agree to some type of Brexit deal before the March 29, 2019 deadline. Negotiations are still taking place; it’s currently difficult to say what the UK’s future may look like.
Rely on an Experienced Expansion Partner to Navigate Brexit Uncertainties
The uncertain UK political and economic climates bring with them a number of concerns for businesses both in- and outside of the UK. Companies that are eyeing the UK as a global expansion destination (or are already established and are looking to the EU for next steps) only benefit from working with an experienced expansion partner that offers a flexible, agile solution. Utilizing Velocity Global’s International PEO (Professional Employer Organization) solution allows businesses to easily establish a presence in both the UK and EU—and can easily transition to an entity when the time is right.
To learn more about what a “Soft Brexit” may look like for the UK, or how Velocity Global’s full suite of global expansion services can help establish your international presence in as few as 48 hours, get in touch with us today. We’re ready when you are.