Now that the voters of the UK voted in favour of "Leave" – Brexit has become a reality. What happens next?
From a European "constitutional" perspective and pursuant to the Treaty on European Union ("EU Treaty"), the UK must notify the European Council of its intention to withdraw from the European Union.
Subsequent to the notice, the UK and the EU will embark on negotiations with a view to reach an agreement setting out the arrangements for the UK's withdrawal from EU, which agreement requires the consent of the European Parliament. Failing an agreement or a mutually agreed to extension of time to reach an agreement, the EU Treaty and the Treaty on the Functioning of the European Union cease to be effective vis-à-vis the UK on a date which is two years after the date of the withdrawal notice.
The most important effect of the Brexit is that the UK would upon the withdrawal being effective no longer benefit from the access to the Single Market. The implications are important.
Business plans may have to be revisited for businesses which entered the UK in order to take advantage of the Single Market. Businesses which have established themselves in the UK may seek to move to another Member State to take advantage of the Single Market.
Supply chain management becomes more difficult in that goods originating in the EU pending any possible future trade agreement may not be able to be imported freely into the UK and vice versa due to future border issues and the future imposition of quotas and tariffs.
Movement of labour will become restricted to the UK causing labour disruptions in those industries dependent on foreign workers such as the hospitality industry. Brexit would also lead to a loss of harmonization of product specification regulation across the EU and a loss of data protection harmonization legislation which could impact servers located in the UK.
With respect to financial services, Brexit may lead to the loss of the benefit of "passporting" rules allowing banks, fund managers and insurance companies to operate across EU Member States. Brexit could lead to the potential loss of UK-based clearing houses for euro-denominated deals which may have to relocate to another Member State – most likely Germany.
In addition after an EU withdrawal, UK courts would no longer be bound by the precedents established by the Court of Justice of the European Union.
Finally, the adoption of the Comprehensive Economic and Trade Agreement between the EU and Canada may be delayed as the EU focusses on the UKs withdrawal from the EU.
We have outlined some of the issues – there are many more which would need to be dealt with in the uncoupling of the UK from the EU.
The Leave win will create some uncertainty as the UK and the remaining Member States of the EU negotiate the terms of a withdrawal of the UK from the rest of the EU.