What Brexit means for Businesses in the EU and the UK?
December 31, 2020 was the last day of the Brexit transition period. While Brexit was voted on in 2016, they did not leave the EU until January 31, 2020, which began the Brexit transition period. During the transition period, the UK was still subject to many EU laws. This meant that very little changed for citizens and businesses in the UK (or doing business with the UK) throughout 2020. Now that the transition period is over, many UK and EU businesses will start to see the effects of Brexit.
Thousands of European businesses with subsidiaries in the UK will be affected by Brexit. Trading between the EU and the UK will be more difficult, with more paperwork and regulations. A large part of the Brexit negotiations has been about tariffs. Right now, goods that originate in the EU-UK free trade area will not have to pay tariffs on goods shipped between the EU and the UK. Goods that do not satisfy the relevant origin rules will be subject to normal WTO import tariffs. In reality, it will be difficult for most EU companies dealing with the UK to avoid additional costs as a result of Brexit.
Brexit has already cost the UK valuable assets that could have benefited their economy, including Tesla ruling out the UK as a location to build their next factory. Likewise, Sony has moved its European headquarters from the UK to the Netherlands. These decisions are directly tied to the economic consequences of Brexit, and there could be more companies following in their footsteps.
Europeans Working in the UK
For European citizens who wish to work in the UK, the company in the UK must obtain a sponsorship license. The European citizen then must prove that they meet certain requirements, and those requirements will determine if you are given a visa. This stems from the United Kingdom’s new points-based immigration system. The EU citizen will have to prove that he or she has a job offer from an approved employer sponsor. The job must require a certain skill level and must pay a salary of at least £25,600, or the going rate of the position, whichever is highest. More information on the points-based immigration system can be found on the UK’s government website, which can be found here.
It is too early to tell how Brexit will affect economies inside and outside of the UK in the long run. But right now in the UK, London is experiencing many share traders moving away from the city to instead trade in EU cities like Paris, Madrid, and Frankfurt. In reality, the exact consequences of Brexit may never be known. The coronavirus continues to affect the lives of almost everyone in the world. This of course impacts the economy, immigration, trade, and so much more. Because of this, it is difficult, if not impossible, to assign sole liability to the UK for many situations that may have been caused by Brexit.
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