Brexit

The scope for a tariff-reducing Free Trade Agreement between the UK and US is narrower than that of FTAs with emerging markets like India, as average WTO-bound tariffs in the two countries are already low. Moreover, nearly half of imports to the United States enter the country duty-free. Similarly, British trade negotiators face limited scope for preferential FTAs with other non-European developed economies like Australia, Japan, and New Zealand. Accordingly, the foremost benefits of a post-Brexit FTA between the UK and US and other developed countries would emanate from reductions of Non-Tariff Barriers.

Compounding anxieties about the foreign trade effects of Brexit, Britain’s international business community voices growing uncertainty over the modality of a post-Brexit trade deal between the UK and EU.

The United Kingdom thus faces the prospect of a “hard Brexit”, departing the European Union in 2019 without a Free Trade Agreement in place. In that scenario, trade relations between the EU and UK would revert to their mutual membership in the World Trade Organisation, bound by the MFN (Most Favoured Nation) tariff schedules and dispute resolution procedures of that multilateral organisation.

On March 29, 2017, British Prime Minister Theresa May signed a letter to European Council President Donald Tusk invoking Article 50 of the Lisbon Treaty formalising the United Kingdom’s withdrawal from the European Union. May’s letter (issued 9months after the Brexit referendum) triggers a two-year negotiation between Brussels and London over the terms and conditions of the UK's exit. 

The UK’s vote to leave the EU poses a threat to the European business community, according to new research conducted for RSM by the European Business Awards. The research asked almost 700 of Europe’s successful business leaders their views on Brexit. 41% think that the UK is now a less attractive investment destination and 54% believe Brexit poses a threat, compared to 39% who see it as an opportunity.

Reflections on the future of accounting and reporting -  a conversation with the chairman of the Corportate Reporting Policy Group at the Federation of European Accountants, looking at the possible effects of Brexit on the development of IFRS.