The impacts of Brexit on business and industry

Flags of UK and EU

With the UK completing its withdrawal from the EU on 1 January 2021, many things changed.  Brexit will have an impact on Finnish people and companies operating in Finland. The relationship between the EU and the UK will be significantly more distant than before.

On 24 December 2020, the EU and the UK concluded their negotiations on the Trade and Cooperation Agreement and the complementary agreements on security of classified information and nuclear cooperation.

The EU countries decided on 29 December 2020 that the three agreements could be applied provisionally from 1 January 2021. The European Council adopted the decision by written procedure on 29 December 2020. This prevented a “no-deal” scenario after the end of the transition period on 31 December 2020.

The European Parliament voted in favour of approving the agreements in its plenary session on 27 April 2021. After this, the Council (i.e. the EU Member States) adopted a separate decision on the conclusion of the agreements on 29 April 2021. This means that the agreements entered into force definitively on 1 May 2021. The Council decision and the final translations of the agreements into all 24 official EU languages, completed in April, are now available in the Official Journal of the EU.

Impact on businesses

As is typical of free trade agreements, the agreement covers topics such as trade in goods, trade in services and investments, digital trade, capital transfers and payments, protection of intellectual property, public procurement, small and medium-sized enterprises, energy, transparency, good regulatory practices and regulatory cooperation, and provisions on equal conditions of competition and sustainable development.

The purpose of the agreement is to create conditions for trade between EU and UK companies. The agreement does not replace the internal market. The provisions in the agreement are considerably more general than the precise obligations in internal market legislation. The agreement reflects a more distant relationship between two sovereign parties, which inevitably means new barriers to trade. The free movement of goods, services, capital and people ended.

However, the agreement is a comprehensive trade agreement and in parts more extensive than previous EU agreements. For example, the agreement grants a completely duty-free and quota-free treatment of products from each party as long as the products comply with the agreement’s rules of origin. It also includes rules on equal conditions of competition related to State aid, work and environmental regulation, fight against climate change, carbon pricing and tax transparency, as well as a binding dispute settlement mechanism and the option for countermeasures to ensure the effective implementation of the agreement. The agreement’s provisions on energy are more detailed than in EU trade agreements usually.

The agreement’s provisions on the UK’s participation in the EU’s research programmes are largely the same as the existing association agreements for the Horizon 2020 framework programme.

Impact of Brexit on businesses

Impact on citizens

The withdrawal agreement of February 2020 ensured a controlled exit of the UK from the EU and addressed the position of EU citizens residing in the EU and UK citizens residing in EU. The withdrawal agreement safeguards the residence, employment and social security rights of EU citizens residing in the UK and UK citizens residing in the EU under EU law for life if they have settled in the UK or the EU before the end of the transition period. Their status and rights will be safeguarded as they are under the key EU legislation on 31 December 2020. With regard to persons moving to each other’s territory after 31 December 2020, free movement ended and restrictions were placed on the entry and rights of EU and UK citizens.

Impact of Brexit on citizens

Withdrawal agreement and negotiations on new relationship

The UK’s withdrawal from the EU entered into force on 1 February 2020. A transition period, which entered into force as per the withdrawal agreement, lasted until the end of 2020. During this time, the EU’s current rules remained in force and the future relationship was under negotiation. During the transitional period, the UK had all the rights and obligations of a Member State. The only significant exception was that the UK no longer participated in EU decision-making or in the activities of EU bodies.

More information on Brexit on the website of the Prime Minister’s Office

Contact person at the Ministry of Economic Affairs and Employment: Tiina Heiskanen, tel. +358 295 064 923