Brexit Update: UK High Court Decision & CFO Study

The past two weeks the focus has been on the other side of the Atlantic, and new British-American relationships might be changing over the next weeks when President-elect Trump announces his policy priorities. The UK has seen some domestic developments as well these last two weeks. 

The High Court’s Decision on Brexit

On 3 November, in an intervention in the procedure surrounding Brexit, the UK High Court issued a ruling that the UK Parliament must give its consent in order for the UK government to be able to trigger Article 50, the article that formally begins the process of the UK leaving the EU. The government had hoped to trigger article 50 without having to seek the consent of Parliament, and the court ruling was therefore a considerable complication of its plans.

The government quickly responded to the ruling by announcing it will appeal the decision to the Supreme Court. It expected that the Supreme Court will hear this case in early December. It has recently been suggested that the UK government may seek to change tack in its legal approach when the case comes before the Supreme Court, arguing that Parliament could have the right to reverse the triggering of Article 50 at any point between its triggering and the moment that the UK leaves the EU, and that therefore it is not necessary to consult them beforehand. Whether new line of legal argument will be effective remains to be seen, but the High Court ruling has certainly created new uncertainty about the practical process of Brexit will operate.

British CFOs Express Brexit Concerns

A study by Deloitte has revealed the depth of concerns that Chief Financial Officers (CFOs) of UK companies feel about the implications of Brexit. Some 65% of British CFOs think that Brexit will have a direct negative impact on their business. In particular, the fears that CFOs expressed are centred on the consequences of a hard Brexit, in which the UK imposes controls on freedom of movement and withdraws from the single market. Two of the most prominent concerns expressed by British CFOs were losses from restrictions in workforce mobility and decreased export opportunities due to non-tariff barriers. Both reduced labour mobility, and non-tariff barriers to trade are consequences of a hard Brexit. 

In contrast, the same study revealed less widespread concerns amongst CFOs in the EU-27. In this group, only 37% expressed the view that Brexit will have a direct negative impact on their business. This reflects the reality that Brexit, while it will have an impact in both the UK and the EU as a whole, is a more fundamental issue in the UK than in the EU-27.