Brexit Overall Commentary OVERALL COMMENTARY

Table of Contents

Politics and Brexit: The Road Ahead for U.K. - EU 01 Negotiations

How did the U.K. Vote? 02

Timeline of Main Steps Taken in the EU and U.K. Post-referendum, 03 2016 and Early 2017

Government after the Referendum 04

Article 50: What does it Mean? 04

Possible Content of a Withdrawal Agreement 05

The Great Repeal Bill: Why is it Important? 06

Possible Future Framework of the U.K. - EU Relationship 07

. Scenario I: Full EU Membership An Extremely Soft Brexit 08

. Scenario II: Full Internal Market Participation, European Economic Area 08 (EEA) and Norway Model Moderately Soft Brexit

. Scenario III: Limited Movement of Services, Switzerland Model Basic 08 Soft Brexit

. Scenario IV: Free Trade Agreement, Canada Model Basic Hard Brexit 08

. Scenario V: Membership of the Customs Union Moderately Hard 08 Brexit

. Scenario VI: No Deal with EU An Extremely Hard Brexit 08

What does the June 2017 Election Mean For Brexit? 09

Brexit Timeline: Events from March 29, 2017 Till April 2019 11 BREXIT OVERALL COMMENTARY

POLITICS AND BREXIT: THE ROAD AHEAD FOR U.K. - EU NEGOTIATIONS

The referendum held on June 23, 51.9 percent to 48.1 percent. The 2016 to decide the U.K.'s referendum turnout was 71.8 membership of the percent, with more than 30 million (EU) saw the Leave vote win by people voting.1

1. Article by BBC, Brexit: All you need to know about the UK leaving the EU, June 2017.

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Wales voted for Brexit, with Leave Remain by 62 percent to 38 HOW DID THE U.K. getting 52.5 percent of the vote percent, while 55.8 percent in and Remain 47.5 percent. Scotland Northern Ireland voted Remain VOTE? and Northern Ireland both voted to and 44.2 percent voted Leave.2 stay in the EU. Scotland backed

Exhibit 1 U.K. Vote Share

Remain Leave

Wales 47.5% 52.5%

Scotland 62.0% 38.0%

Northern Ireland 55.8% 44.2%

England 46.6% 53.4%

Source: EU Referendum Results, BBC, June 2016

2. Ibid.

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Exhibit 2 Timeline of Main Steps Taken in the EU and U.K. Post-referendum, 2016 and Early 2017

25 June 23 June Appointment of Didier Seeuws as Head of the Special Referendum on the U.K.'s membership of the EU Task Force on the U.K. within the General Secretariat of the Council 24 June Official announcement of the referendum results (48.1% remain 51.9% leave)

28 June 28 June David Cameron informs of the outcome (EP) Resolution on the decision to of the referendum in the U.K. leave the EU resulting from the U.K. referendum 14 July New U.K. PM unveils cabinet ministers: David Davis becomes secretary of State for Exiting the EU; 29 June Liam Fox becomes International Trade Secretary Informal Meeting of the other EU 27 Heads of State and Government (without the U.K.) on the outcome of the 2 October referendum in the U.K. Theresa May announces that the U.K. will invoke Article 50 no later than March 2017

3 November 26 July Council Decision establishing a revised order of The High Court rules that the government alone does not presidencies, from 1 July 2017 to 2030 have power under the crown prerogative to give Article 50 notice without being given authority by parliament

5-8 December 27 July U.K. Supreme Court hearings of U.K. government appeal on power to trigger Article 50 TEU Michael Barnier named chief negotiator of the Commission, to be in charge of the negotiations with U.K. 7 December under Article 50 TEU House of Commons passes non-binding resolution on triggering Article 50 by 31 March 2017 and requesting the Government's negotiating plan 8 September 17 January 2017 EP Conference of presidents nominates as EP coordinator for Brexit Speech by Theresa May setting out the Government's negotiating plan for Brexit

24 January 2017 14 September Supreme Court ruling on the appeal in Article 50 case European Commission sets up Article 50 Task Force led by Micheal Barnier 2 February U.K. government publishes white paper on Brexit

16 September 8 February 2017 The Bratislava Declaration and road map agreed at EU withdrawal bill completes third reading in House of informal meeting of the 27 Heads of state Commons 13 March 2017 U.K. parliament adopts the EU withdrawal bill without 29 September amendments

EP Conference of Presidents tasks the EP committees with 29 March 2017 analyzing the impact of the U.K.'s withdrawal in their respective policy areas Article 50 Invoked

Source: European Parliamentary Research Service

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Following the results of the Following her appointment as PM, referendum, David Cameron, a May created a new department GOVERNMENT supporter of the Remain campaign, called 'Department for Exiting the AFTER THE resigned and was succeeded by EU', headed by David Davis, which Theresa May, the home secretary in is responsible for overseeing REFERENDUM his cabinet. She became the Prime negotiations to leave the EU and Minister (PM) without a full establishing the future relationship Conservative leadership contest between the U.K. and the EU. after her key rivals from the Leave campaign pulled out from the contest.

On March 29, 2017, the U.K. how the country will leave the government announced it was Union, while taking account of the ARTICLE 50: WHAT invoking Article 50 of the Treaty of framework of the future DOES IT MEAN? the EU, which serves as formal relationship with the Union.3 Once notification of its intent to leave the triggered, Article 50 allows for two EU. From this day onwards, the U.K. years of negotiations, which can be and the EU have two years to extended unanimously by the negotiate a withdrawal agreement European Council. that sets out the arrangements for

Exhibit 3 What is Article 50?

art.50.2 A Member art.50.2 In the light art. 50.4 (.) the It shall be concluded art.50.3 The treaties State which decided of the guidelines member of the on behalf of the shall cease to apply to withdrawal shall provided by the European Council or Union by the to the State in notify the European European Council, of the Council Council, acting by a question from the Council of its the Union shall representing the qualied majority, date of entry into intention negotiate and withdrawing Member after obtaining the force of the conclude an State shall not consent of the withdrawal agreement with that participate in the European Parliament agreement or, failing state, setting out the discussions of the that, two years after arrangements for its European Council Qualied Majority the notication withdrawal, taking or Council or (.)unless the account of the in decisions 72% of They European Council, in framework for its concerning it EU represent agreement with the future relationship countries at least Member State with the Union.(.) vote in 65% of the concerned, favour EU's unanimously (excluding population decided to extend the with (not this period. drawing including the Member population State) of the Withdrawing Member State)

Source: ...

3. European Parliament, Article 50: How the future of EU-UK relations will be decided, March 2017.

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Under Article 50(3) TEU, the legal agreement could also seek to consequence of a withdrawal from address the status of the POSSIBLE the EU is the end of the application withdrawing state's citizens CONTENT OF A of the Treaties and the Protocols working for EU institutions.6 thereto in the state concerned from WITHDRAWAL that point on. The rights and The composition of the EU AGREEMENT obligations deriving from the institutions could be expected to treaties would therefore extinguish. change as of the day the In addition, agreements between withdrawal takes effect, with the EU and third countries or members from the withdrawing international organizations would state losing their seats in the also cease to apply to the state various institutions and bodies. withdrawing from the EU, and it Taking into account any would thus need to negotiate arrangement made in the alternative arrangements. A agreement between the EU and withdrawal agreement between the the withdrawing state with regard U.K. and the EU will have to include to their future relationship, the EU phasing-out processes for financial Treaties remain valid for the rest and other related dealings. It is of the Member States and any incumbent upon the U.K. to enact amendments required as a new laws to ensure a smooth consequence of the withdrawal withdrawal from the EU. However, it would need to be made in must be borne in mind that a neat accordance with the procedures 7 severing of ties may not be established by the Union. advisable if there were to be future dealings between the two.

The structure and composition of EU institutions will likely change once the withdrawal is effected. U.K. officials will lose their positions and seats in various EU institutions and agencies.4

With regard to EU citizenship, the agreement considers EU citizenship as 'additional' to a Member State's nationality (Article 20(1) TFEU) and without a free-standing character. Any contract-based rights would persist so long as the contracts remain valid, although the withdrawal agreement would address such issues in order to gain legal certainty.5 In this context, the

4. P Nicolaides, 'Withdrawal from the European Union: A typology of effects', Maastricht Journal, Vol. 20, 2013, pp.209, 218. 5. European Parliament Research Service, Article 50 TEU: Withdrawal of a Member State from the EU, February 2016. 6. O Dörr,'Commentary to Article 50 TEU', op. cit., para. 29. 7. European Parliament Research Service, Article 50 TEU: Withdrawal of a Member State from the EU..

wnsdecisionpoint.com 5 A day after triggering Article 50, According to EUR-Lex, the EU's the U.K. government proposed a legal database, there are THE GREAT new bill titled 'The Great Repeal currently over 12000 EU REPEAL BILL: WHY Bill' on March 30, 2017. The Great regulations in force.10 In terms Repeal Bill is meant to repeal the of domestic legislation which IS IT IMPORTANT? European Communities Act 1972 implements EU law such as (ECA). It is the ECA that gives legal directives, research from the credence to EU law and establishes House of Commons Library it as supreme. The Great Repeal Bill indicates that there have been will convert EU law into domestic around 7,900 statutory law the day the U.K. leaves the EU. instruments which have Time is of the essence here. Any implemented EU legislation. gaps or lacunae in the law that In addition, research from the might arise as a result of this move House of Commons Library out of the EU will need to be indicates that out of 1,302 U.K. plugged instantly. The bill will Acts between 1980 and 2009, ensure that where possible the 186 Acts (or 14.3 percent) same laws and rules are brought incorporated a degree of into effect in the U.K. after its EU influence.11 departure from the EU.8 The Bill was formally introduced The bill has three main objectives:9 in Parliament during the Queen's Speech on June 21, 2017, and will . To repeal the ECA and return pass through several stages of power to U.K. institutions. parliamentary scrutiny before . To convert EU law as it stands at being set into motion. If the bill the moment of exit into U.K. law, goes unopposed in both Houses subject to the detail of the of Parliament, it will come into proposals set out in the U.K. effect the day the U.K. formally government's white paper. This leaves the EU. will allow businesses to continue operating knowing the rules have not changed significantly overnight, and provide fairness to all individuals. It also ensures that it will be up to the U.K. Parliament to amend, repeal or improve any piece of EU law at the appropriate time once the U.K. leaves the EU.

. To create powers to make secondary legislation: This will enable corrections to be made to the laws that would otherwise no longer operate once the U.K. leaves the EU and will also enable domestic law to reflect the content of any withdrawal agreement under Article 50.

8. Department for Exiting the European Union, Legislating for the United Kingdom's withdrawal from the European Union, March 2017. 9. Ibid 10. Ibid. 11. 'How much legislation comes from Europe?', House of Commons Library Research Paper 10/62, 13 October 2010, p. 19.

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As the U.K. prepares to leave the this framework. For the city of EU, several dimensions need to be London, for example, authorization POSSIBLE FUTURE carefully considered while deciding to operate in the EU (known as FRAMEWORK OF on the future framework of the passporting), will be crucial, U.K.-EU partnership. Much of the because any financial intermediary THE UK-EU debate has been about whether wanting access to the single RELATIONSHIP the U.K. can retain its access to the market will require separate EU single market after Brexit while regulatory consent once the U.K. curbing the freedom of movement leaves the EU. of workers from other EU countries and drastically reducing its EU Outlined below are six possible 'membership fee'. Whether this will ways in which the future U.K.-EU happen remains to be seen, as relationship can be framed. How curbing the inflow of migrant and when one of these options is workers from other EU countries finalized is dependent upon both was the primary reason for the the form of U.K.'s negotiations with Leave vote. the EU and its own domestic political structure. Trade and investment linkages are equally important components of

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Scenario I: Full EU Referred to as the 'softest' form of EU and U.K., access to formal Membership An Brexit, this scenario ensures U.K.'s funding programs of the EU and continued access to the EU single application of EU rules in the U.K. Extremely Soft Brexit market after its formal departure However, this also means that the from the Union. This implies full U.K. won't be able to make any free movement for goods, people, separate third-party trade deals services and capital between the with other countries.12

Scenario II: Full Internal A moderately soft Brexit is similar EU internal market rules with little Market Participation, to the Norway-EU model. It allows or no influence, along with the the free movement for goods, freedom to enter into third-party European Economic services, capital and people, engagements with other countries. Area (EEA) substantial financial contributions and Norway Model from Norway and other EEA Moderately Soft Brexit member countries, application of

Scenario III: Limited A basic form of soft Brexit is similar influence over EU market rules, free Movement of Services, to the Switzerland-EU movement for people and freedom arrangement. This means non-tariff to make third-party arrangements Switzerland Model barriers for goods, access for with other countries. Basic Soft Brexit services, financial contributions, no

Scenario IV: Free Trade A basic 'Hard Brexit' implies the financial contributions, no Agreement, Canada U.K.'s departure from the single application of EU rules in the market, with no tariff barriers for U.K. and the freedom to make Model Basic Hard goods, limited access for services, third-party arrangements with Brexit no free movement for people, no other countries.

Scenario V: Membership This means no tariff barriers for no blanket application of EU rules of the Customs Union goods with an additional common with some limits on ability to make external tariff, no free movement of trade deals with third-party Moderately Hard Brexit people, no financial contributions, agreements.

Scenario VI: No Deal Considered as the cleanest form of members, no free movement for with EU An Extremely Brexit, a no-deal scenario will align people, no financial contributions, U.K. to the World Trade no influence of EU rules, with the Hard Brexit Organization (WTO) rules, implying freedom to make third-party non-discriminatory access for arrangements with other countries. goods relative to other WTO

12. The UK in a Changing Europe for Political Studies Association of the UK, Brexit and Beyond: How the United Kingdom might leave the European Union.

8 wnsdecisionpoint.com With the aim to seek a direct Paisley, the Brexit-supporting, mandate for her plan to deliver a pro-Union party will play a WHAT DOES THE smooth British exit, May called a major role in the EU exit and JUNE 2017 snap election to be held on June 8, the new parliament. 2017. However, her quest for a ELECTION MEAN 'stronger mandate' was thwarted The surprise outcome of the June FOR BREXIT? when the voters returned a hung election and May's subsequent deal parliament. The Conservatives with the DUP has pushed the Brexit remained the biggest party, process into greater uncertainty. winning 318 seats, with 326 needed With the DUP insisting on a soft to secure a majority, and losing 13 Brexit and greater investment in seats since the 2015 election. The Northern Ireland in return for its Labour Party, led by Jeremy support of a minority Conservative Corbyn, gained 30 seats since the government, the road to Brexit can 2015 election, securing a total of take any direction and form. 13 262 seats out of the 650 declared. Here are a few political scenarios May has now sought the support of and the form Brexit could take her new Northern Irish allies, the under those based on our previous Democratic Unionist Party (DUP). Brexit scenario analysis. Founded in 1971 by the late Rev. Ian

13. Article by Financial Times, Election results 2017: full list and map, June 12, 2017.

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Exhibit 4 ------

Political Scenario Brexit Scenario Gainers Losers

Theresa May manages Switzerland Model/Free EU manufacturers who The Services sector, to stay on as PM till Trade Agreement could sell to the UK including Financial March 2019 with support Basic Soft Brexit without facing tariffs, Services, would lose from DUP such as those in ''Passports'', which Tariff-free movement automotive, confer the right to sell The DUP will continue to of goods, limited access pharmaceutical and banking, insurance and exert pressure on May to services, free aerospace industries other financial services, for a soft Brexit. movement of people, gaming, architecture and freedom to engage in management third party agreements consultancy services UK's new domestic legislation to come into effect. Independence from the European Court of Justice unlikely.

Theresa May is forced to Moderately Hard Brexit Britain's and Europe's Goods that do not step down as PM manufacturing sectors conform to EU Membership of the regulations and are Second General election Customs Union, with subject to custom brings the Conservatives non-tariff barrier for checks, Agriculture, to power under a new goods, no free Services Sector leader with movement of people, parliamentary Majority. no blanket application of EU rules with limits on ability to make trade deals with third party agreements UK's new domestic legislation to come into effect Complete Independence from the European Court of Justice Extremely Hard Brexit No Deal Will align UK to WTO rules with non-discriminatory access for goods relative to WTO members

Theresa May is forced to Extremely Soft Brexit Financial Services to Supporters of the step down as PM continue to sell using ''Leave'' stand and Continued access to the ''passports'', food those who wanted UK Second general election Single Market manufacturers, to take back control'' brings the Labour Party construction companies from Brussels to power Publish EU Rights and Protections Bill to ensure People in trades no detrimental change competing with to worker's rights , European labour equality law, consumer would face relatively rights or environmental unchecked EU protection immigration

Source: The UK in a changing Europe, The Manifestos Uncovered; WNS DecisionPointTM Analysis.

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Exhibit 5 Brexit Timeline: Events from March 29, 2017 till April 2019

29 March . Article 50 Triggered

30 March . Great Repeal Bill published

31 March . President of European Council publishes Spring negotiation guidelines . Great Repeal Bill announced at the opening of Parliament 19 June . Start of formal face-to-face talks between Michael Barnier 21 June and David Davis in Brussels . The Queen's speech at the opening session of parliament that included 22-23 June the Great Repeal Bill . Beginning of June's EU summit as a full EU28 meeting with a 26 June broad agenda . Commission to report back to EU27 and other institutions on the 17 July progress of talks . Second round of talks between EU and UK 24 September representatives . German Parliamentary Elections. The outcome will decide structure of the 1-4 October deal the bloc concludes with the UK . Conservative Party Conference

October December . First Stage of Brexit negotiations covering the principles of Brexit to be concluded between October and December 2017 October 2018 . Deadline set by Barnier to conclude Brexit talks, including March 2019 transitional arrangements and a . Ratication by EU member states, the future relationship Ratication European Council and the European process to begin Parliament to be complete . UK departure from the EU should be complete

Source: House of Commons Library, Brexit Timeline: events leading to the UK's exit from the European Union; Financial Times, June 14, 2017

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