Think Ahead
 

Impacts of
leaving the EU

 

Frequently asked questions

We have compiled a list of frequently asked questions our customers and stakeholders have asked us, which we hope you will find helpful. We will add to this list as the negotiations between the UK and the EU progress and we get more clarity, so please check back from time to time.

Brexit Impact

1. What has been the impact of the Brexit vote?

Contrary to what many expected, the Brexit vote has not stopped the flow of investment in Northern Ireland, from both indigenous companies and new inward investors. Recent investment examples include:

In the nine months since the EU Referendum, we have secured 62 per cent more new inward investment projects than in the nine months preceding.

Recent investment examples include:

  • GES, based in Londonderry, is investing nearly £2 million to upgrade its facility, purchase new machinery and create 61 new jobs across a range of roles.
  • Texas-based software company, Bazaarvoice, is setting up a European base in NI, creating 168 software engineering, sales and customer service roles over the next few years.

Our exports also continue to grow. For the latest 12 months rolling period (April 2016 - March 2017) they increased by 11.8 per cent compared to the same period one year ago, and by 18.7 per cent compared to two years ago.

Exports

1. What is the current level of trade between the UK and the EU?

In 2015 about 44 per cent of UK exports in goods and services went to other countries in the EU in 2015. This works out at £220 billion (total exports were £510 billion) and represents approximately 12 per cent of the value of the British economy in 2015. It has stayed around 13 to 15 per cent over the past decade.

53 per cent of imports into the UK came from other countries in the EU in 2015. That proportion has not changed that much over the past 16 years.

2. What will be the impact of Brexit on Northern Ireland exporters?

The EU remains a key trading partner with approximately 55 per cent of all Northern Ireland manufacturing exports going to European markets. According to the Regional Trade Statistics: HMRC (2016/17), 74 per cent of Northern Ireland’s EU manufacturing exports goes to three countries: the Republic of Ireland at £2.5 billion, Germany at £402 million and France at £401 million.

EU Member Trade Agreements between Northern Ireland and the EU remain in place and will continue for at least two years, with good opportunities for Northern Ireland exporters across a wide range of sectors.

While it is still too early to know what the future trading relationship between the UK and EU will look like, we are hopeful that mutually beneficial trading arrangements will ensure continued access to the EU market, whilst also having the freedom to develop new bi-lateral agreements in emerging markets and other geographies.

However, we acknowledge that in the short term there may be challenges and are proactively engaging with all of our key exporters to understand their specific issues and see if they can be addressed. We continue to provide a wide range of support in Europe for both new and existing exporters to help exploit current opportunities.

Employment

1. What will be the impact on the freedom of movement for workers?

Leaving the EU calls into question the position of UK nationals living and working in Europe as well as EU citizens working in the UK.

Both the UK Government and the EU have published proposals on how this might be addressed: UK position paper and EU position paper

The UK proposes that existing EU nationals who wish to remain in the UK move to settled status following Brexit. It is hoped that early agreement will be reached between the UK and the EU on this.

In parallel, the UK Government is developing proposals for a new set of migration rules which will come in to force following Brexit. These rules will govern the ability of EU workers to move to the UK in the future. It is expected that further details on these proposals will be made available later this year.

2. What will be the impact on the Common Travel Area?

It is not membership of the EU or the Good Friday Agreement that guarantees freedom of movement to citizens of the UK and Ireland but rather the Common Travel Area, which has existed between the two jurisdictions for over 90 years.

The Common Travel Area (CTA) refers to administrative arrangements providing a special immigration control regime, such as between the UK and the Republic of Ireland, which has been in place for the most of the period since 1922.

In practice, the aims of these arrangements have been to ensure relative freedom of movement between the two states, and to establish forms of co-operation between the two states’ immigration authorities.

Continuing with CTA arrangements appears to be compatible with EU law.

3. What other employment issues are likely to arise for businesses in Northern Ireland?

Whilst there is no clear indication of how employment law and regulations may be impacted, most commentators feel that the following areas are unlikely to change.

National Minimum Wage

  1. This is very much a UK Government initiative and regulations are not required by European law.
  2. Furthermore, the UK National Minimum Wage is significantly higher than that in similar European systems and the UK Government recently introduced the National Living Wage.
  3. You can find out about the national minimum wage and national living wage rates and your main responsibilities regarding the national minimum wage on our business information website, nibusinessinfo.co.uk.

Transfer of Undertakings (TUPE)

  1. On 6 April 2006, the revised Transfer of Undertakings (Protection of Employment) Regulations 2006 and the Service Provision Change (Protection of Employment) Regulations (Northern Ireland) 2006 came into operation.
  2. The UK has gone further than the EU in terms of TUPE and when it applies, so there are unlikely to be any changes.
  3. You can find out about TUPE legislation in Northern Ireland on our business information website, nibusinessinfo.co.uk

Unfair Dismissal and Tribunals

  1. Legislation relating to unfair dismissals and tribunals will almost certainly remain the same. Much of it did not originate from the EU, for example the fees system which was introduced to stop spurious claims.
  2. You can find out more about the types of dismissal, unfair dismissal and employment-related tribunal claims on our business information website, nibusinessinfo.co.uk.

Discrimination

  1. While many of the UK laws regarding discrimination derive from the EU, it's unlikely that there would be any major overhaul. Many UK discrimination laws were developed before the formation of the EU.
  2. There would be much criticism, and potentially wider social implications, if these laws were to be repealed. When it comes to issues such as the gender pay gap it is impossible to know how they will be shaped. However they will probably remain unchanged for the foreseeable future.
  3. You can find out about equality law and the types of discrimination, employment protection rights in relation to industrial tribunal claims and how you can monitor and promote equality and diversity in the workplace on our business information website, nibusinessinfo.co.uk.

Data Protection Act

  1. This is a bit of an unknown area as it came about from an EU law and it is difficult to predict exactly how it will be affected. However, echoing the approach to discrimination laws, it is unlikely that the Data Protection Act would be repealed.
  2. You can find out how rules on data protection are likely to affect your business and how your business can assess its compliance with the Data Protection Act on our business information website, nibusinessinfo.co.uk.
  3. The UK Government has committed to implementing the EU wide General Data Protection Regulation in order to maintain alignment with EU. Its Future Partnership paper sets out its vision for UK-EU data flows post-Brexit and seeks early agreement so that each area’s data protection laws provide equivalent protection and allows data to continue to flow between the EU, the UK and other third countries post-Brexit. However, some areas may change, for example:
    • Working Time Regulations

      The Working Time Regulations (1998) has long been a point of contention with politicians campaigning for the UK to opt out. They influence weekly working hours, rest periods, paid annual leave and extra protection for night workers. While it is difficult to say how each of these points will be affected, it is more than likely that they will be restructured beyond current recognition but it is unlikely that they will be completely repealed. You can find out more about the Working Time Regulations (Northern Ireland) 2016 on our business information website, nibusinessinfo.co.uk.

    • Agency Worker’s Rights (AWR)

      The AWR is expected to be high on the list of legislation to be amended or fully repealed. AWR was introduced to comply with the EU's agency workers’ directive and is almost universally unpopular. It has been heavily criticised and is expected to be completely repealed. This document will give you more guidance on the Agency Workers Regulations (Northern Ireland) 2011

4. What about the impact on EU-US Privacy Shield?

The EU-US Privacy Shield is a framework for transatlantic data flows. It replaces the previous framework, known as Safe Harbor. This new arrangement was announced in 2016 and provides stronger obligations on companies in the US to protect the personal data of Europeans and stronger monitoring and enforcement by the United States Department of Commerce and the Federal Trade Commission (FTC).

The UK Government has said that it wants an early agreement with the EU on data sharing. Proposals published in August highlight that the UK ‘starts from an unprecedented point of alignment with the EU’. In recognition of this, the UK wants to explore a UK‑EU model for exchanging and protecting personal data, which could build on the existing adequacy model. The adequacy arrangements are where the EU certifies that a country outside of the EU provides the right standard of protection to allow data sharing to continue. This topic will continue to form a key element of the upcoming phase of negotiations with the EU.

Corporation Tax

1. What impact will the decision have on the plans for the Northern Ireland Executive to set a lower rate of Corporation Tax?

Brexit will not directly stop or change plans for Northern Ireland’s new, lower corporate tax rate of 12.5 per cent. The ability to introduce the lower CT rate remains with the Northern Ireland Executive.

The new lower corporate tax rate will, when combined with the region’s other tax incentives, make it the lowest anywhere in Western Europe. (Other tax incentives include Patent Box Corporation Tax of 10 per cent, low personal taxation, low social welfare contributions, generous tax allowances, no local taxes on profits or surplus, R&D Tax relief up to 230 per cent and an extensive tax treaty network of over 135 treaties).

Designed to create jobs in the local economy, business must be conducted in the region in order to avail of the 12.5 per cent.

It will also allow us to more aggressively target investment in sectors such as advanced engineering and manufacturing, health and life sciences where we are already world leaders in niche areas.

With reduced taxes local, profitable businesses will have additional finance to invest in their future growth, in turn creating more jobs and further investment in our economy. Ultimately, corporation tax has the potential to create almost 30,000 additional jobs in Northern Ireland over the next 15 years or so.

Inward Investment

1. In your statement you say “all factors remain” that make Northern Ireland a great place for business. Surely being part of the EU is one of those factors?

Our talent, our tax and our value proposition for inward investment remain very resilient and Invest NI will continue to sell Northern Ireland on that basis.

2. Was easy access to Europe for trade not also a key selling point? Does the decision to leave the EU not risk this?

At present, Invest NI predominantly targets cost centre opportunities as Northern Ireland cannot offer a tax and profit advantage. Cost centres are mainly offshore service centres for their parent operations, and the majority of them are based in the USA or Great Britain, so market access is not a key issue for them.

The two key factors of talent and cost have not changed so we expect to continue to drive forward on our plans for foreign direct investment into Northern Ireland. The majority of those investors and those in our pipeline for first time investment, are not looking for market access, nor will they be impacted by a change in that position.

We do acknowledge that some investors have raised longer term concerns regarding the movement of people and managing regulation between the UK and the EU and will continue to work with the Northern Ireland Executive and UK Government to ensure these concerns are addressed.

3. Will the period of uncertainty over our relationship with Europe not have a negative impact on potential investment?

Contrary to what many expected, the Brexit vote has not stopped the flow of investment in Northern Ireland, from both indigenous companies and new inward investors. In the nine months since the E.U. Referendum, we have secured 62 per cent more new inward investment projects than in the nine months preceding.

Having seen the number of new investors grow by 40 per cent over the past five years, we are confident that Northern Ireland will continue to succeed as an attractive location for investment, in particular from our largest target market, the USA.

Our highly educated people, and our cost effectiveness, are the two main themes of our sales message, and it is these two factors that have attracted the majority of investors over the past few years. They in turn, serve their home markets in USA and elsewhere, so EU market access is not always an issue.

However, we recognise that, for those internationally owned companies who do export to EU, the current uncertainty will be a difficult time. We are proactively engaging with all of our key customers to understand their specific issues and to see if they can be addressed.

Funding

1. What is the latest position regarding EU funded programmes?

Following his announcement in August 2016, which guaranteed funds for projects signed up until the Autumn Statement, the Chancellor has now extended this guarantee to the point at which the UK departs the EU. In a statement on 03 October 2016, the Chancellor confirmed that the government will guarantee EU funding for structural and investment fund projects, including agri-environment schemes, signed after the Autumn Statement and which continue after we have left the EU.

Funding for projects will be honoured by the government if they meet the following conditions:

  • they are good value for money; and
  • they are in line with domestic strategic priorities.

As a result, businesses, farmers and other organisations will have additional certainty over future funding and should continue to apply for EU funding while the UK remains a member of the EU.

The message from the Department for Business, Innovation and Skills (BIS) which leads on EU Structural Funds for the UK Government is also that programme implementation should continue.

With this, and until instructed otherwise, we will continue to implement the programmes as agreed and to maximise drawdown of the available EU funding.

2. What is the latest position on State Aid Case handling?

The State Aid position is consistent with the UK Government’s central position:

  • There will be no immediate change to our relationship with the EU.
  • While the UK is still a member of the EU, all rights and obligations will apply.
  • The UK will continue to participate in decision making.
  • The legal position is that the State Aid rules continue to apply and all the UK’s rights and obligations remain until we leave the EU. This means that we still must:
    • notify aid where necessary and follow all the normal processes, including completing the General Block Exemption Regulation (GBER) forms;
    • respond fully and promptly to European Commission information requests and produce evaluation plans if necessary;
    • complete our annual reports, and crucially continue with the implementation of the transparency requirements required under State aid modernisation; and
    • continue with normal compliance work.

Current indications are that case handling by the European Commission should proceed on a business usual basis with cases passing through the system.

The European Commission will act professionally towards us and our cases. It does however mean that there will be virtually no scope to seek special treatment. This includes asking for cases to be expedited or automatically seeking to escalate cases.

Any decision to escalate cases must be cleared by the United Kingdom Permanent Representation to the European Union (UKRep), the Department for Business, Energy & Industrial Strategy (BEIS) and the European and Global Issues Secretariat (EGIS).

3. Can I still participate in Horizon 2020?

Yes. The UK Government has confirmed that where UK organisations bid directly to the European Commission on a competitive basis (such as Horizon 2020), it would underwrite the funding for projects, even when specific projects continue beyond the UK’s departure from the EU.

Horizon 2020 is the biggest EU research and innovation programme with nearly €80 billion of funding available over seven years, from 2014 to 2020, in addition to the private investment that this money will attract.

The UK economy is fundamentally strong and Northern Ireland’s research and innovation is world leading. The UK’s decision to leave the EU has no immediate effect on those applying to, or participating in Horizon 2020 as the UK is still an EU member state. UK participants can continue to apply to the programme in the usual way.

4. Will applications to Horizon 2020 be discriminated against if they include the participation of UK organisations?

There is no immediate change. UK organisations can continue to participate in Horizon 2020 under the same terms and conditions as they currently do.

5. Can I still coordinate or lead a Horizon 2020 project?

There is no immediate change. UK organisations can continue to participate in Horizon 2020 under the same terms and conditions as they currently do.

6. What is being done to reassure other Member States that including UK organisations in a Horizon 2020 proposal consortiums is not a risky thing to do?

There is no immediate change. UK organisations can continue to participate in Horizon 2020 under the same terms and conditions as they currently do, and should not be discriminated against during the evaluation of proposals.

7. What will it mean for UK participants in funded Horizon 2020 projects if the UK leaves the EU before the project finishes?

The UK Government has confirmed that where UK organisations bid directly to the European Commission on a competitive basis (such as Horizon 2020), it would underwrite the funding for projects, even when specific projects continue beyond the UK’s departure from the EU. However, further clarity is required as to when the cut-off is and whether it is applications submitted by the time the UK leaves the EU or agreements signed.

For Structural Fund projects, where signed contracts or funding agreements are already in place or where the agreement is signed in the ordinary course of business before the Autumn Statement (usually November), projects will be fully funded, even when these projects continue beyond the UK’s departure from the EU.

Read the letter from the Treasury setting out the detail (PDF)

8. What happens to the schemes Invest NI operates that are funded by the EU?

Invest NI will continue to write new business and draw down EU funding until such times as we are made aware of any changes and the terms for the future of EU funding are renegotiated. It is very much business as usual.

9. How many Invest NI staff are funded through EU support and what impact will there be on them?

Invest NI has 26 members of staff who currently work directly on EU funded programmes. Their employment status would not be directly affected by future changes to funding. We will continue to align all of our resources to ensure that we meet our organisational goals, and prepare for the opportunities within our new Business Strategy 2017-21 (insert link) - support-for-business/business-strategy.html?.

10. How much funding does Invest NI draw from EU on an annual basis?

Between £20 million and £30 million per annum of our budget is EU-funded, depending on our expenditure profile and exchange rate variations.

11. How much funding did Invest NI draw from EU in the current Programme for Government period?

Over the previous Programme for Government period (2011-2015), £105.9 million of our funding came from the EU Sustainable Competitiveness Programme (EUSCP) which is part of the European Regional Development Fund (ERDF).

12. How much European Structural Funds money does Invest NI anticipate it will get from the EU in the current Programme by the time the UK leaves?

Invest NI will have committed its full allocation of approximately £210 million ERDF support from the EU by end of March 2019 when the UK exits. Any of this support not drawn down from the EC by that date will be guaranteed for payment by HM Treasury, thus having no adverse impact on Invest NI’s budget.

Enterprise Europe Network (EEN)

1. What is the EEN?

The Enterprise Europe Network (EEN) is an initiative funded through the COSME and Horizon 2020 programmes. It promotes excellence in innovation and international collaboration for SMEs and operates in over 60 countries globally, including in many of the world’s major economies.

In England, Northern Ireland and Wales (ENIW), Innovate UK leads a single EEN consortium of 21 organisations. This is the largest single EEN consortium globally.

The EEN’s current six-year cycle began in January 2015 and runs until 2020. Its formal contractual basis is a Framework Partnership Agreement (FPA) for the 6 years to which all 21 ENIW partners are signatories. The FPA involved an open tendering process held across Europe.

2. What is the impact on EEN?

EEN remains open for business to support ambitious UK companies to innovate and grow internationally.

EEN will continue to play an important role with an increased requirement from businesses for information, support and guidance on:

  • access to finance, market access and regulations;
  • seeking new markets and partners, most likely outside of Europe;
  • understanding a different funding and support environment in the UK; and
  • achieving business growth.

EEN operates in over 60 countries and can continue irrespective of the UK’s relationship with the EU.

EEN enters a new two-year programme delivery period from 01 January 2017. Beyond the end of 2018 EEN will need to take into consideration the UK’s status in the EU at the time and the funding for the operation of the Network.

Offers of Support to Invest NI Customers

1. I have an existing Letter of Offer of financial support from Invest NI that has not yet been completed. Is there now a risk that I will not receive the promised funds?

No. For offers which are expected to be drawn down up to the point of the UK’s exit, there will be no issue. For offers which extend beyond the point to the UK’s exit from the EU, we would expect additional funding to be made available from baseline budgets.

2. I am currently negotiating a new Letter of Offer for financial support from Invest NI. Can I depend that it will be delivered?

Yes, Invest NI will continue to write new business and draw down EU funding until such times as we are made aware of any changes.

Role of Invest NI

1. What are you saying to your customers and stakeholders?

We recognise that many of our customers and stakeholders may have questions or queries regarding the potential impact of the UK leaving the EU. As a trusted business partner it is important that we engage with our customers, listen to their feedback and questions and respond where we can.

We have been proactively contacting our customers to understand the immediate concerns and to provide whatever support and guidance we can. Internationally, our overseas teams are proactively engaging with investors to reiterate our strong value proposition and address any concerns which may exist.

Read the statement from our Chief Executive, Alastair Hamilton following the EU Referendum result

2. What impact will Brexit have on the future role and function of Invest NI?

Clearly we have a big job to do, helping businesses in export markets all around the world and increasing our sales and marketing effort to continue to grow investment and support job creation.

It is important to remember that the majority of our funding is not drawn from EU sources, so we will continue to utilise every tool available to us to deliver the support businesses need to grow and we will fully explore all potential new opportunities that may emerge following the EU Referendum result.

We do not foresee any immediate changes in our main support mechanisms, particularly for inward investment which is primarily around selective financial assistance and skills. These are not reliant of EU funding and remain unaffected. We will continue to keep our support mechanisms under review so that they meet the needs of our customers as the Brexit landscape evolves.

3. What is Invest NI doing to help local companies prepare?

Think Ahead is our dedicated online resource for businesses on issues relating to Brexit.

We proactively contacted all our customers in the immediate period after the vote to ascertain their main concerns. We have maintained contact to keep abreast of issues and to understand the challenges they face and ensure our support helps them prepare for future changes.

We have enhanced our export support, including more help towards more market visits, support for small to medium sized enterprises to visit Great Britain and the Republic of Ireland and increased the number of days of in-market Trade Advisory support.

We established a Business Liaison Group to consider the potential implications on business, and identify future challenges and opportunities, reporting this feedback directly to the First and deputy First Minister.

At the same time, we are working closely with colleagues in the Department for the Economy, Department for Exiting the EU and the Department for International Trade to ensure that the implications of Brexit for Northern Ireland businesses are clearly understood.

We have identified and nurtured key sectors, largely within the information technology space, that we know, despite political changes, will be critical to the new global economy.

We are increasing our international presence with 10 new locations, five of which have been announced (Santiago, Singapore, Doha, Madrid, Toronto and South Africa) with a dedicated person in each to work with Northern Ireland companies interesting in exporting to the region.

Read the statement from our Chief Executive, Alastair Hamilton following the EU Referendum result

Latest News

6
Features
Deal done on phase one of the UK’s departure from the EU
David Roberts, Invest NI Economist
Dec 12, 2017
Brexit update following EU Council meeting on 20 October 2017
David Roberts, Invest NI Economist
Oct 23, 2017
Focus on Great Britain market remains steadfast
Alison Gowdy, Director of Trade
Sep 20, 2017
Growth of new business hits new record high
David Roberts, Invest NI Economist
Aug 10, 2017
Increasing our international presence
Steve Harper, Executive Director of International Business
Jun 22, 2017

Events

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