‘Too early’
Dan O’Brien (chief economist, Institute of International and European Affairs) said that while it was too early to accurately describe the wider economic or social impact of Brexit, the services sectors in Ireland, Britain, and the larger EU economies have been largely unaffected and have, in many cases, outperformed their competitors.
Legal experts discussed the effects of the Retained EU Law (Revocation and Reform) Bill, and the possibility of diverging or converging legal systems; or of an emerging wait-and-see approach from the British legislature in relation to some EU and internationally-agreed standards.
The aim of that proposed law is to tidy up legislation, reduce the red tape, and make it easier for businesses to work.
‘Sunset date’
Any divergence or convergence in those pieces of legislation may have a potential impact on businesses in those jurisdictions, while 31 December 2023 is the planned ‘sunset date’ by which the British Government must decide the future of almost 4,000 pieces of EU-derived legislation.
GDPR will likely fall away, said Matheson technology and innovation partner Rory O’Keeffe, given the recent introduction of the Data Protection and Digital Information (No 2) Bill, which represents a change from earlier approaches.
Britain is also adopting a wait-and-see approach with AI regulation.
“Although they’re not moving ahead for now, they are moving forward with their own agenda to make it a best-in-class economy in the AI space, with their active involvement in the creation of international AI standards.
“We’ll have to wait and see how it will work out in the end,” said O’Keeffe.
Weaker capital expenditure
“The biggest hit from Brexit so far has been weaker capital expenditure. Consumers have also been hit by a weaker pound since late 2015, and goods exports to the EU were hit after Brexit took place. However, Britain retains strengths, and a lot of the commentary around its weaknesses is exaggerated,” economist Dan O’Brien said.
Britain’s services trade with the EU continues to grow, the webinar heard, and negative Brexit effects are hard to see in the sector.
Its GDP has underperformed since the referendum, although not catastrophically, and negative Brexit effects are hard to see in its services trade, O’Brien added.
Britain remains the largest seller of international services within the EU – which is a big strength – and 2022 also saw an increase in its services’ exports, the webinar heard.
Britain’s services sales with the EU continue to grow across almost all areas, but particularly in financial services and insurance/pension services.
Bilateral trade
Bilateral trade in services between Ireland and Britain has grown strongly since 2016, and continued to increase during 2022.
This has been dominated by strong technology-services’ exports from Ireland to Britain, followed by the business services and financial-services sectors.
Trade from Britain into Ireland has followed a broadly similar upward trend, driven by a strong Irish economy, in the pharmaceutical and technology industries especially.
Recent years have seen a doubling of industrial performance here, driven by a growing pharma industry, and a tripling of tech exports.
Matheson partner Joe Beashel said that where there are established frameworks, such as the Basel III Reforms (Basel 3.1) and Solvency II up for review in a post-Brexit regulatory environment, not much change is expected, largely due to the need to align with broader international standards and circumstances, which might constrain any divergence.
“However, there are newer areas of law, such as ESG or technology, where there may be opportunities for changes to be made to certain regulations and legislation,” Beashel said.
“We’ll see some laws being actively changed, but passive changes could also occur,” he added.
Enforcement trends
Regulatory investigations team partner Karen Reynolds said that there is already a commonality of enforcement trends across the EU, and a central setting of regulatory priorities.
“We advise a lot of businesses who operate internationally across borders, and they’re already dealing with divergent regulatory systems and legal practices.
“In the ESG area for example, the US is out ahead in terms of enforcement actions, and in the digital-assets world, there are new areas where regulators are now catching up.”
“Regulatory practices often come from the same sources within Europe. In some emerging areas we don’t have a rule-book yet, so it’s open to regulators to create them as they go along. Policy-makers are concerned with stability and will carefully avail of opportunities,” she added.
The event was opened by the head of Matheson’s London office, Sharon Daly, and was moderated by Irene Lynch Fannon, head of knowledge management at Matheson.