Brexit has consequences not just for Britain but also for our EU partners. On the 11th July our French partner firm, August and Debouzy, hosted an event in Paris called 'Brexit - Now what?' to which I was invited to give the UK perspective on Brexit.

As many of the issues related to any Brexit, and future settlement between the EU and the UK, are still subject to much political conjecture, it was fitting that in addition to three partners from August and Debouzy (Emmanuelle Barbara, Gilles August, and Kami Haeri) the other panellists were well positioned to give a political take on events: Pierre Lellouche, centre-right member of the French parliament and former Minister for Europe; Stéphane Fouks, vice president of Havas, the global advertising company headquartered in Paris; and Gérard Errera, former French ambassador to the UK.

The EU after Brexit

The discussion quickly focused on the political. Pierre Lellouche identified three geopolitical challenges faced by the EU which it appeared less able than ever to meet, an incapacity which Brexit had the potential to worsen: Globalisation and its impact, in particular, on EU unemployment; increasing global population and migration into Europe; and finally, security and jihadist terrorism. Pierre hoped that Brexit might give rise to a clearer understanding of these challenges and a renewed willingness by the EU to meet them.

On the more prosaic matter of Brexit, Pierre advocated a new model for the EU which would, in essence, create a much looser arrangement for countries outside the core EU member states (presumably the eurozone group). This second circle of countries, including the UK, would have access to European markets without being locked into the same EU institutional framework. He also envisaged a third circle which might at some point encompass Turkey and Russia.

Reaction to Brexit

There was genuine concern from some participants who represent companies that export into the UK but also an interest as to what opportunities Brexit would present for France, particularly in the sphere of financial services. It was noted that the French government had just announced some tax breaks for French nationals returning to France which was squarely aimed at French bankers in London. However, whilst certain banks, such as HSBC, had announced that they would likely relocate some workers to France in the event of a Brexit, there was an acknowledgement that, for various reasons, other jurisdictions in the EU offered a more favourable environment for financial services than France. Many of those present were also curious to understand the reasons for the Brexit vote.

I addressed, in broad terms, the background to Brexit, in particular, the basic misalignment of the UK with the federalist European project. I touched upon some of the political considerations including those related to when the article 50 notification may be given; considered the various alternative models for the UK's future relationship with the EU; and the possible impact of being unable to come to an agreement on continued access to the EU single market, namely, "hard Brexit". In conclusion, I hoped that the French would come to see the UK as a better neighbour than it had been a flat mate!

Challenges ahead

Whilst there appeared to be respect for the Brexit decision, there was genuine curiosity as to how the UK believed it would fare outside the EU and, in the near term, how it would conduct negotiations with the EU. It was clear from the debate that many anticipated that the result would give rise to economic damage both within the UK, and the rest of the EU; and that negotiating with the EU will present many political challenges.

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Brian McDonnell

Brian McDonnell

Partner, Financial Regulation

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