With the aftermath of the vote to leave the European Union dominating political debate in the UK, the Government has negotiated the terms of its withdrawal from the EU. The Withdrawal Agreement Bill has passed its second stage reading in the House of Commons, but time ran out for the legislation to pass before the 31st October deadline. The EU has therefore granted an extension, lasting until the 1 February 2020 at the latest. The EU has included in this delay the provision that the Withdrawal Agreement isn’t up for renegotiation during the extension period.
The Government has subsequently called a General Election, which will take place on 12 December. Brexit is likely to feature heavily during the campaign as a key issue, and whoever forms a Government following the vote will have to answer a number of questions almost immediately after taking office. For example, will the Prime Minister be able to secure support for a withdrawal agreement in time, or will the UK leave without a deal on the 1 February 2020? Will the PM ask for an extension, or cancel Article 50, halting the UK’s departure? Whatever happens, it is important that the IFoA and its members are continue to prepare for any eventuality.
What’s more, if and when the UK does leave the EU, in whatever form Brexit takes, it is likely to impact the work of actuaries in the UK and EU. It will mean potential changes to regulation, such as Solvency II, as well as affecting migration, demographics, and the broader economy. Quite how its effects will manifest themselves still remains highly uncertain.
Brexit timeline of events
View our Brexit timeline of events for more details on the process to date, and the key dates still to be navigated.
Getting ready for Brexit
1 February is less than a four months away, and before the election was called the Government launched a campaign to ensure that UK citizens and businesses are prepared for the potential impacts of Brexit, if the UK leaves on that date. Although this has now been paused, preparations continue in anticipation of a 1 February departure date.
The IFoA has been engaging with the UK Department for Business, Energy and Industrial Strategy (BEIS) to ensure that the IFoA is prepared for all Brexit eventualities. BEIS provides the IFoA with regular updates and resources, and we have also attended numerous Brexit Readiness events, including forums on no-deal communication and the mutual recognition of qualifications.
The IFoA will be taking steps to mitigate any potential Brexit effects, and would encourage all members to make sure their places of work are aware of the need to do the same.
The Government has prepared a number of tools and resources to help people and businesses get Brexit ready, and the IFoA would encourage its members to take advantage of the available guidance:
- Gov.UK has a dedicated webpage for Brexit preparation, with resources for individuals and organisations https://www.gov.uk/brexit
- The Government has also created a tool to check your Brexit readiness https://www.gov.uk/get-ready-brexit-check
- There is also a library of sector-specific briefings on how to ensure businesses and individuals are ready in the event of no-deal https://www.gov.uk/government/collections/how-to-prepare-if-the-uk-leave...
- For residents of British Overseas Territories also affected by Brexit, guidance is available from the UK Government via its main Brexit page. The Government of Gibraltar and the Gibraltar Financial Services Commission have also issued Brexit guidance https://www.gibraltar.gov.gi/brexit / https://www.fsc.gi/regulated-firms/brexit-info-firms
- IFoA Members living and working in non-UK EU states should also look for guidance issued by their Government on the effects of Brexit, and any actions they will need to take in the event of the UK’s departure with or without a deal.
Further information is being issued all the time, so remember to keep checking for the latest updates and guidance. Organisations wanting to keep up to date with the latest news and preparedness events from BEIS via the Brexit Business Readiness Bulletin can join the mailing list by emailing email@example.com.
Brexit challenges and opportunities for the profession
Over the past year, the IFoA’s Council has considered the potential for Brexit to impact the IFoA, actuaries and the industries in which they work. These challenges and opportunities are summarised below.
Managing macroeconomic effects
- No Deal: Most sources predict that a ‘No Deal’ Brexit will have an immediate negative effect on the UK economy, potentially causing a shrink in UK GDP.
- The Deal: A managed Brexit is predicted to lead to a smaller negative impact on the UK economy following withdrawal
Trade relationships with EU and non-EU countries
- No Deal: With no new trade agreement with the EU, the rules of the World Trade Organisation would apply. Mutual recognition and access to the single market would end, necessitating a new regime, however the UK Government has indicated it would accept some European Union rules allow EU firms to operate in the UK for up to three years.
- The Deal: The Government aims to secure the freest and most frictionless trade possible in goods with the EU outside the single market via a new free trade agreement. Mutual recognition of professional qualifications would continue, but importantly services will not be included in the new customs arrangement.
Maintaining high regulatory standards while encouraging innovation and growth
- No Deal: The UK would cease to be a member of dozens of regulatory agencies that govern many aspects of daily life. It will be particularly challenging for the UK to assume this responsibility all at once if a 'no deal' scenario also means that there is no transition period.
- The Deal: There would be regulatory arrangements for financial services, but these would not replicate the EU's passporting regimes (which enables authorised EU firms to trade freely in any EU state), meaning that the UK and the EU will not maintain current levels of access to each other's markets.
The impact on actuaries and their employers
- No Deal: The UK government has indicated it intends to secure the rights of EU citizens living in the UK under a 'no deal' Brexit scenario. The rights of UK citizens living in the EU have not yet been guaranteed. Members would experience significant disruption while new regimes were put in place, including mutual recognition of qualifications and working cross-border.
- The Deal: While an agreement will limit the immediate effects of a Brexit on the profession, the end of passporting, the lack of regulatory equivalence, and freedom of movement are potential challenges.
We will continue to monitor and react to the opportunities and challenges that Brexit presents.
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