Managing partner in Australia Wayne Spanner and managing partner in EMEA Martin Scott have co-authored an article in The Australian Financial Review about the risks and opportunities stemming from Brexit.
You can read more about this issue on our dedicated Brexit page.
The following article was first published in The Australian Financial Review and is reproduced with permission.
Now that the dust has settled on the UK's vote for Brexit, the extent of the challenges facing British and international businesses is becoming clearer.
From our conversations with business leaders, regulators and others, it is clear that among their chief concerns are uncertainty for the future, the impact on international trade and trading patterns, how London will evolve as a financial capital, access to capital markets, consequences for supply chains, data protection, and the employment status of key employees.
Many of those we have recently met with in London believe it will always remain the global financial city. But they acknowledge that there is still a long way to go before the lasting impact Brexit will have on the financial industry is clear.
Preparation, including a thorough understanding of the legal risks, is now key. Even though a departure from the EU will take years to play out (and it's heartening to see that UK Prime Minister Theresa May is winning support for a significant period of planning and review before Article 50 of the Treaty on European Union is triggered) businesses will need to constantly refine their plans to identify the challenges and opportunities that Brexit may bring.
A quick look at likely impacts on major industries highlights the enormity of the task at hand. For energy, the UK remains bound by domestic emissions reduction legislation, but questions remain about the impact of existing and future EU climate and energy legislation, including in respect of renewables.
Financial institutions will be concerned about the future state of regulation, and the impact on the close connectivity of UK and EU insurance and banking markets.
And in the technology space there are real questions about data flow and storage from the EU to a post-Brexit UK. The EU Commission will need to make a call on whether a post-Brexit Britain was a safe country for the transfer of personal data.
So how does all this affect Australia?
As a start, many of the industry-specific issues flagged above will be of concern to Australian-based companies with a stake, or a desire to invest, in those sectors.
The impact on Australian trade in or through the UK, in terms of business access to the single market in the EU, will also be pivotal. There are 1500 Australian UK-based companies using the UK as a springboard into that single market. And 30 per cent of Australia's exports to the EU are done via the UK. The UK will be looking to conclude trade treaties with most of its partners around the world and Australia is one of the first jurisdictions to have indicated its willingness to enter into these negotiations. Global law firms should put a trade treaty practice in place to help clients in this area.
While the Australian economy continues to transition from its resources focus, the additional pressure points that Brexit will bring are sure to add complexity and create new risks and opportunities.
We know Australian boards and general counsel are increasingly risk conscious. The ability to absorb and mitigate evolving Brexit risk may end up being crucial to determining who wins and loses from a post-Brexit world.