The Slovenia Times

Global insights: PwC on Brexit



Economy and trade
With a number of unknown factors at play, confidence in the UK economy could be shaken with instability in worldwide financial markets as well as a potential decline in investment of concern. In addition, once the UK Government invokes Article 50 to leave the EU, the UK and EU will need to jointly consider whether the current free trade area will continue.
This is an opportunity for Slovene companies - they should be considering whether they can find new business partners in the UK. If businesses in the UK will be forced to look for new trading partners then there is an opportunity for any proactive business to throw its offer into the ring.

Tax, regulation and legislation 
As part of the exit process, the UK will have to amend and replace existing EU legislation with Acts of Parliament enforceable under UK law. The EU itself is also likely to reform its own operations, legislation and regulations. This is where the Slovene government has an opportunity to act. It is not easy for businesses to enter new markets as they come across new regulations and working practices which means that they have to change their internal processes. 

Organisational strategy
Organisations will need to adopt strategies and ensure they have adequate resources to respond to the uncertainty brought about by the anticipated changes in the market. 

In summary
Negotiations on Brexit between the UK and the EU will formally begin when Article 50 is triggered which is expected to happen by the end of March. There will then be a two year negotiation period on the legal terms of Brexit, but it will probably be a much longer negotiation, perhaps lasting five to ten years. There will probably therefore be a need for transitional arrangements between the UK formally leaving the EU in, say, 2019 and the later agreement and ratification of some kind of free trade agreement.
The outcome of these negotiations will depend on whether the parties see this as a 'zero sum game' or not. If they do, then it may prove very difficult to reconcile the UK government's political imperative to increase control of EU immigration and the EU's fundamental belief that freedom of movement is an essential pre-requisite for efficient functioning of the EU Single Market. But a superior outcome could be possible if both sides are prepared to be flexible.
There are long and difficult negotiations ahead, but also the potential for a mutually beneficial compromise if both parties approach the talks with a flexible mindset. Business can also play a role by contributing constructively to the debate on post-Brexit options, focusing on areas where the UK and the EU can continue to work together to boost growth and innovation across Europe.


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