Brexit Breakfast Briefing: IAB UK offers practical guidance for businesses

Our Brexit adviser, Konrad Shek, led this morning’s discussion, which aimed to shed light on some of the confusing Brexit terminology as well as the wider implications.

The UK is currently set to leave the EU on 29 March 2019, but the final Brexit outcome is far from certain. Despite the Prime Minister’s best efforts to negotiate a Withdrawal Agreement, a 585 page document that sets the terms of the ‘divorce’, Parliament overwhelmingly rejected it. This leaves the UK at risk of a ‘no-deal’ Brexit.

So, what does happen next?

Shek, described negotiations as complex, akin to a ‘three-dimensional chess game’, particularly as the EU consisted of 27 other countries.

“By not removing the threat of a ‘no-deal’, it becomes a high-risk strategy” he warned. Most MPs appeared to be against no-deal, but there was no consensus for other options such as another referendum or a General Election. The difficulty of a second Referendum was that it needed support from the Government, who argued that the objectives of the first Referendum had not been implemented. Moreover, it was difficult to get agreement on what question(s) would be put to the people. Extending the deadline for Article 50 (which sets out the process for leaving the EU) would require unanimous agreement from the EU27. But more importantly the upcoming European Parliament elections and the start of a new EU Budget cycle needed to be factored in. The EU would not want to extend indefinitely.

Despite this, Shek theorised that the most likely short-term outcome would be a delay of Article 50, simply, because time was extremely short.

What are the post-Brexit options?

Shek compared the so-called ‘Chequers’ plan, promoted by the PM, against other possible Brexit options such the Norway model, Canada + and even a hard Brexit.

He also noted that a recent Treasury analysis paper showed that in each option there would be a negative impact to the UK economy, although he noted the difficulty in predicting actual outcomes.

Key considerations for those in digital advertising

In a practical sense, Shek highlighted a number of factors to keep front-of-mind:

• Economy - The Brexit uncertainty was feeding into consumer confidence. A recent Enders analysis suggested that the overall advertising industry may suffer in the event of no-deal Brexit, but online advertising may hold up better because of SME ad spending. However, if goods or trade is reduced then brand owners may decide to reduce marketing budgets,” he warned.

• Continuity of EU agreements - The UK is currently able to trade with many nations at preferential terms because of existing EU Free Trade Agreements. But it was not certain that all of these will roll over. It also had implications for the EU-US Privacy Shield.

• Talent- The Government’s White Paper on Migration has stated that a future UK Migration policy will be a skills-based one, rather than giving preferential access based on location. This means EU/EEA citizens will be treated no differently from non-EU/EEA citizens.

  “It is important to share your views on this with the Government,” he told delegates, “so that businesses’ workforce requirements are addressed”. An EU settlement scheme was recently announced for EU citizens to allow them to stay in the UK beyond Brexit. A separate scheme for non-EU EEA Members States and Switzerland was still under negotiation.

  In addition, while both sides have made the commitment that short-term travel will not be affected, trade in services through the movement of people may be subject to economic need test by certain EU Member States.

• Data- The implications for UK-EU data flows post-Brexit are uncertain. Shek emphasised the importance of adhering to GDPR requirements regardless, given that these regulations will be incorporated into UK law after our departure.

  “Data Adequacy is in the gift of the EU to give, but the EU will not start negotiations with the UK until it becomes a third country” he added. “The UK has made the commitment that data will flow to the EU/EEA, but essentially the free flow of data from the EU/EEA will stop without a data adequacy decision,” he warned.

  Shek’s advice was to set up safeguards such as Standard Contractual Clauses (SCCs), as a prudent contingency measure to allow data to flow from the EU/EEA to the UK regardless of the outcome. The Information Commissioner’s Office (ICO) website had an interactive tool to generate approved SCCs that could be customised.

Future trade policy

As for the UK’s future trade policy, the Government was prioritising trade deals with the US, Australia, New Zealand and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) countries. Shek said that UK-US trade links were long standing and it was not clear what a UK-US FTA could offer over and above what we enjoyed now. A trade deal with Australia and New Zealand was not likely to substitute the loss in EU trade. CPTPP offered an interesting prospect as it covered a fast-growing part of the world. In response to a question from the audience, Shek said that China and India were complex markets and it would likely take longer for the UK to conclude a trade deal with them.

What’s the most likely outcome?

Shek faced a lively audience Q&A session, which gave a flavour of the depth and breadth of concerns from IAB Members. Top of many people’s mind was what the likely final outcome. Shek said that it was hard to predict as there were too many moving parts. It was difficult not to rule out a no-deal Brexit given that red lines on both sides had not shifted.

Where to seek help

During the session, the IAB announced the publication of a Brexit FAQ and Checklist on its website and is actively welcoming calls from digital marketers seeking guidance on any of these issues or wanting to feed their organisations’ views into the Government’s planning for Brexit. Contact [email protected] for guidance or to input your views.