What is Brexit?
It's highly unlikely that anyone doesn't know the answer to this question, but just in case, and for our members outside of Europe who may not know all of the details, here's a quick summary;
- On 23 June 2016, Britain held a referendum on whether to remain in or to leave the European Union. This prospect of a "British Exit" from the EU became known as "Brexit".
- 48.1% voted to remain in the EU, but the majority, 51.9% voted to leave the EU (i.e. for a Brexit).
- The British Prime Minister David Cameron resigned immediately following the vote, and political chaos in all the major political parties in the UK has ensued
- Since the vote, the British pound (GBP) has fallen sharply to a 30 year low and the financial markets have been deeply affected
- To actually exit from the EU, the British Government must officially notify the other EU members of its intention to withdraw by invoking Article 50 of the Treaty on European Union, and from this point there will be 2 years to negotiate the terms of withdrawal. As yet, there has been no clarity on exactly when article 50 will be invoked.
What will the effect of Britain leaving the European Union on Global Mobility?
We asked our RES Forum Technical partners for their insights into what the effect will be on the industry and this is what they told us.
- MOVE Guides- Talent Mobility Transformation
I suspect that we will see a spike in global mobility in the near term. There is discussion of whole companies moving out of London, discussions of moving staff from the UK. I suspect there will also be more self-initiated relocations from London as expatriates evaluate whether they want to continue living in a country that, outside of London, Scotland and Northern Ireland has so aggressively sent a message that they may not be wanted. Google said that searches for ‘move to Dublin’ have skyrocketed. So in the near term, it likely means a lot of global mobility activity.
I expect that there will also be a lot of concern from assignees about the volatility of the pound, and whether companies will be doing anything to mitigate the sharp fall in the GBP.
Brynne Herbert, Founder & CEO, MOVE Guides
(Excerpt taken from an article by Brynne Herbert, entitled 'The impact of Brexit on global mobility'
- AIRINC- International Assignment Data
As a result of Brexit, Expats may be less willing to be mobile in the face of great uncertainty and volatility. Expats may also have concerns about committing to a host-pay approach in the UK. For Expats paid on a traditional tax and cost- equalised package, the frequency of COLA updates should be reviewed and an immediate currency reconciliation may also be needed. Organisations should choose the right approach in light of the company's specific demographics and reward approach. A well-designed and up-to-date mobility program will help facilitate the right moves, and allow organisations to weather the storm no matter what the outcome.
Kay Hall, Vice President EMEA, AIRINC
Brexit For Mobility Professionals Webinar
AIRINC also held a "Brexit for Mobility Professionals" webinar on 7 July which dealt with issues such as whether organisation's current policies and processes may need some temporary (or even permanent) changes to address Brexit's current and future economic impact on mobility, and provided practical tips and suggestions for weathering the immediate Brexit storm. You can watch a recording of the webinar by clicking here and entering your details-
- RW3- Intercultural Training
Looking at EMEA in the long term, we believe that the extent of international trade should not change dramatically as a result of Brexit, but where that trade is conducted, and the location of companies engaged in that trade, may change to the UK's detriment. This would go hand in hand with a reduction of inward foreign investment, and a lower level of economic growth for the UK as a result. As for the wider future of the EU, will the UK's experience, if negative, convince other member states to remain, or will Brexit signal a gradual disintegration? There are too many unknowns at present to answer that crucial question for now.
Paul Bailey, General Manager, Europe, RW3
- SilverDoor- Temporary Accommodation
It’s hard to say right now what effect Brexit will have on the serviced apartment market but much will depend on the reaction of companies that have a foothold in the UK. If there’s a sudden rush to relocate headquarters to other financial centres around Europe then there’ll certainly be an increase in demand for serviced apartments in those cities.
Stuart Winstone, Commercial Director, SilverDoor
- Harmony Relocation Network- International Household Goods Moving
From a household goods moving perspective, the main issue we at Harmony Relocation Network foresee is uncertainty for the status of the UK within Europe, and the consequences thereof for the UK and the other EU countries. Uncertainty usually means a standstill, and only once the dust settles will companies make further decisions on assignments. Multinationals from the USA and Asia may decide to select other European countries as their main hub. So we expect more exports from the UK than imports into the UK in the short term, and a slowdown of the UK international household goods moving market.
Paul Bernardt, Managing Director, Harmony Relocation Network
- Mazars- Expatriate Tax and Social Security
With regard to the Tax implications of Brexit, - There is undoubtedly a period of considerable uncertainty for the UK, which is not good news for business. However, the full impact of Brexit may be softened by the UK renegotiating replacement deals with the EU. The great unknown is how favourable these will be and how long this will take as no one has done this before. We do not know at this stage how multinational business will view Brexit: whether multinationals may move their headquarters out of the UK, or whether the potential for less regulation could be seen as attractive. As noted at the start of this article, it is too early at this stage to assess what the final tax implications will be, and given there will be at least a period of two years to negotiate the exit, immediate action is not necessary. (Excerpt taken from Mazars' article "Brexit- the tax implications")
- Willis Towers Watson- Expatriate Employee Engagement
Since the UK’s decision to withdraw from the European Union, we have seen upheaval in both political and financial markets as the initial impact of this momentous decision begins to take effect. However, it is unlikely that the full ramifications of this decision will be seen for some time, and certainly not until formal exit negotiations begin.
For now, the exact consequences of UK withdrawal for future policy and regulation remain unknown and nothing has changed. Organisations based in the UK should not feel forced into immediate action. Willis Towers Watson will continue to closely and actively monitor developments. We are also well placed to support companies in areas such as investment strategy, monitoring of regulatory developments and talent management. Despite all of the unknowns created by the referendum outcome, there will be opportunities for companies that remain well prepared, agile and risk aware. Nicolas Aubert, Head of Great Britain, Willis Towers Watson
(Excerpt taken from Willis Towers Watson's EU referendum site)
Questions? Ask our Technical Partners for further advice
If you wish to discuss any of these points further, contact details for all of the RES Forum Technical Partners can be found on our website
Thoughts from the RES Forum's Partner, Jose Segade.
The Referendum vote represented a very personal vote for Britons on a number of different levels, and feelings, whether of joy, relief, disappointment or fear, remain strong more than two weeks after the vote. What seems certain at this point is the uncertainty that awaits over the coming months, along with a lengthy and impatient wait to get any kind of clarity on what the Brexit vote means for mobility, and immigration in particular.
What can companies reasonably be doing on this point? The tracking of EU nationals/dates of initial entry in to the UK would seem to be a reasonable starting point. If time permits, or during a next RES meeting, it may also be worth pondering how the non-EU migration system will be affected by what is likely to happen to EU migrants. What does the Brexit vote mean for the RES team I hear you all ask? Well, a Spanish passport holder based in the UK, a UK passport holder based in Germany, as well as a strong Scottish contingent... answers on a postcard please....