Bored of Brexit? We are too, but here’s iContract’s snapshot of practical things you should consider and some specific factors affecting financial services, law and IT contracting:
So, it’s actually happening, but when?
We now know Theresa May intends to trigger Article 50 of the EU treaty between 1 January and 31 March 2017. This will start the 2-year clock ticking on Brexit no later than 31 March 2019.
Will it be hard or soft Brexit?
No one actually knows because it depends on the exit negotiations, but the UK government seems intent on a ‘hard’ version, which prioritises immigration controls and full independence from European Court jurisdiction, at the expense of access to existing free trade arrangements.
Does it matter to contractors?
The personal impact will vary depending on your nationality and qualifications, but in the next 1-3 year timeframe at least, iContract continues to believe contractors will benefit as a whole. Like traders, who hate stability in the markets, volatility and uncertainty are likely to increase the demand for contractors. Figures from IHS/Markit shortly after Brexit in their Report on Jobs confirmed that this is happening already with permanent hiring suffering a sharp drop and contract roles increasing.
So, what should I be doing?
We would certainly recommend thinking about and planning for all options available to you right now in order to cover the bases:
· Are you eligible for a British and an EU country dual-citizenship? For instance, if you are British, you may be married to an EU citizen (or vice versa), one or both of your parents’ heritage may entitle you to a second passport, or, those with Northern Irish heritage are eligible to apply for an Irish passport.
· Do you have qualifications that will be recognized abroad? Whether you are from the UK or not, the advantage of contracting is often increased mobility but could you/would you move abroad? Do some research in your field now about the practicalities. By the time Brexit happens, iContract will have expanded to cover many contractor markets outside the UK, such as the EU, Singapore, HK, Australia so we’ll be there to support you if you choose to move abroad.
· Are you staying aware of changes that will happen to contractors? Changes are almost inevitable to things like IR35, Agency Workers’ Regulation (AWR), VAT rules and other legislation from the EU affecting you as a contractor. Any relaxation of these rules may make it easier for firms to hire contractors. iContract has written about IR35 in particular in other blogs and we intend to keep you informed of any relevant changes to regulations.
An Institute of Directors survey revealed 43% perceived Brexit to be a threat overall, whereas only 9% rated it a ‘positive’ opportunity. So iContract did some research as to what seem to be the largest issues in each of the 3 sectors that we cover (for now) that are driving the need for contractors:
What is the main impact for the legal sector?
· All major companies should be auditing their portfolio of commercial contracts. Clauses covering trade restrictions, immigration controls, currency and dispute resolution will all be affected.
· Laws affecting almost every area of business will need to be re-written.
· Force majeure and material adverse change clauses are likely to come under scrutiny as they are likely to be used in renegotiations and some will end up in court.
· FX volatility that is already happening may prompt the early renegotiation and/or litigation of currency clauses, particularly those pegged to GBP or EUR.
What is the main impact for financial services?
· The Treasury confirmed just yesterday that protecting the UK’s financial services will be a ‘high priority’ in Brexit negotiations (even in a ‘hard’ Brexit). This appears to follow a report commissioned by TheCityUK suggesting Brexit could cost the sector £48bn in revenue, 750,000 jobs and £10bn in tax receipts.
· Mayfair, the City and Canary Wharf are full of foreign financial institutions and staff. The UK cannot afford and will not want to jeopardise these. Although many institutions are nimble and used to operating offices cross-border, wholesale re-locations of HQs are unlikely, as Frankfurt, Paris and other centres simply do not have the same scale and allure as being in London. Some spreading of functions or offices within the EU is however almost certain.
· The ability the UK will have to adapt or reverse the massive increase in EU financial regulations, in banking and funds in particular (such as MIFID, AIFMD, CRD IV, EMIR), may provide attractive flexibility to institutions. It could be the ‘best of both worlds’ for the sector.
What is the main impact for those in IT?
· Many IT projects may be delayed or amended until there is more certainty, but new ones are likely to arise with more IT work overall.
· The UK may become more focused on trading with the big global IT markets in US, India & China, rather than with the EU.
· A large number of IT contractors are from abroad. If this is restricted, it may push contractor rates up; but IT projects may be moved abroad as a result.
· A weak Sterling encourages inward investment, which is likely to lead to an increase in IT infrastructure projects in particular but also others.
We hope you found the blog interesting – please feel free to engage with us about any issue. Please also pre-register if you’ve not already done so, to stay connected with contracting jobs and news.