The
UK government has been ramping up preparations for a no-deal Brexit, since the
beginning of summer 2018. Theresa May had promised to set aside of £4.2 billion
for Brexit. An extra £2.1 billion, pledged by the Prime Minister Boris Johnson after
taking office, will be made available to get the UK “fully ready to leave” the
EU on 31 October.
What
is the impact and has the Government been doing enough to prepare for Brexit?
Data
flows
Mehreen
Khan, Jim Pickard and Janina Conboye view that vast volumes of personal data from
EU and UK citizens flow across the English Channel every day. If the UK leaves
the EU without a deal, the data flows could be disrupted and may become a
barrier to trade.
Under
the Regulations, the UK government has done what it can to preserve the free
flow of personal data from the UK to the EEA. However, the UK cannot provide
for free flow of personal data into the UK. So, data imports are most at risk
in the event of a no-deal Brexit.
A
system of contractual clauses offered by Brussels, allowing non-EU companies to
carry out data transfers in compliance with European law, could offer a
fallback. The UK's ICO has
also published guidance for businesses and SMEs on preparing for a no deal
Brexit. In the longer term, the UK may sign an agreement with the EU to
preserve the data free flow, but Brussels feels it could take “years” for it to
be concluded.
Financial
Services
Although
the UK leads the EU’s financial services sector, there is still uncertainty how
the sector will work after Brexit.
Brussels
has taken some contingency steps, including the temporary transitional power,
which allow firms to get their houses comply with rules lasting until December
2020.
In
order to reduce the risk and impact of EU businesses being suddenly cut off
from UK-based clearing houses, Brussels has granted EU institutions temporary
access to the clearing houses such as London’s LCH, ICE Clear Europe and LME
Clear, which are critical parts of the financial system. The access will however
expire on March 30, 2020.
Irish
Border
Under
the contingency plan published by the UK on 13 March, the government would not
bring in new checks or controls, or require customs declarations for any goods
moving from Ireland to Northern Ireland, in the event of a no deal.
However,
it remains unclear what will happen to goods travelling from Northern Ireland
to the Republic of Ireland.
Transport
For
airlines, the commission has passed two legal acts allowing airlines to fly
point-to-point between the UK and European cities, until March 2020. Flight operators
will not be able to fly on to other EU destinations, or take new passengers to
a non-UK destination.
For
lorries crossing the customs, extra checks might be needed and could lead to
miles of tailbacks. A Road Haulage Association (RHA) spokesman said lorry
drivers could face two day waits without food or toilets. Operation Brock, a
contraflow system is designed to reduce traffic issue in the event of a no-deal
Brexit. Part of the £2.1 billion will be used as extra funding for the operation.
What
about Malaysia? What is the impact of Brexit on Malaysia?
Developing
economies, particularly Southeast Asian nations, will get hit by Brexit. Malaysia,
fortunately, has grown less dependent on the UK. Our share of exports to the UK
in 1995 was 4.4 per cent and has now fallen to about 0.2 per cent today. Thus,
the impact on exports would not be significant.
However,
according to Datuk Dr. John Antony Xavier, the dampened of the EU growth rate of
about one per cent this year and the next, would lead to a decline in world
growth to about three per cent this year. If Brexit does dampen world growth,
then Malaysian exports might feel the brunt of a hard Brexit.
Also,
a falling pound means exporters will be hard pressed to raise their prices to
compensate for the pound’s depreciation, which could make our exports less
competitive in the UK market. Malaysian students, on the other hand, will
benefit with a cheaper pound as it makes tuition fees and property investment
in the UK more attractive.
Reference
1. Rachel Schraer & Tom Edgington, No-deal
Brexit: how prepared are the EU and UK? www.ft.com
2.
How
to prepare for no-deal Brexit: what you actually need to do before the UK
leaves the EU on 31 October, i news, 8 Aug 2019
3.
Debbie
Heywood, Cross-border data flows after a no deal/no adequacy Brexit https://globaldatahub.taylorwessing.com
4. Datuk Dr. John Antony Xavier, Bracing
for a no-deal Brexit www.nst.com.my
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