Brexit

United Kingdom's withdrawal is sealed. England is now a third country. What are the next steps and what does it mean for the fund industry? The facts at a glance.

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The British decided to withdrawal and left the EU on 31 January 2020. The United Kingdom is now a third country from an EU perspective. The EU and the British had previously conducted intensive negotiations to agree on the conditions for the UK's withdrawal and to create legal certainty after withdrawal.

What happens after 1 February 2020?

When the British left the EU, a transitional period began which will last until 31 December 2020. The UK will no longer be represented in the EU institutions, bodies and agencies. However, EU law will continue to apply in the UK until the end of the transitional period.

What status will the UK have during the transition period?

As a so-called third country, the United Kingdom no longer participates in EU decision-making processes since 1 February 2020. However, as a result of the withdrawal agreement, the United Kingdom will remain in the internal market and customs union until the expected end of the transitional period on 31 December 2020. The government in London must decide before 1 July 2020 on a one-off possible extension of the transition period by up to two years.

The parties must now negotiate what the relationship between the EU and the UK will look like after the transition period. If no agreement can be reached, there is the threat of another "hard brexit": instead of a special relationship, the law of the World Trade Organization WTO will apply - with tariffs and other trade barriers.

What does the withdrawal mean for the fund industry?

The German fund industry is remaining calm. The BVI has successfully worked towards cooperation between the EU27 authorities and the UK financial supervisory authority, so that, as things stand today, outsourcing of fund management will be possible beyond the end of the transition period. The effects on the investment universes are also limited. Funds have always been allowed to invest in third countries under certain conditions; this will also work with the UK.

 

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