How will Brexit affect business investments from the Middle East?

How will Brexit affect business investments from the Middle East?
Nadine Goldfoot, Partner and solicitor at Fragomen UK
Published: 28 February 2019 - 5 a.m.

Nadine Goldfoot, Partner and solicitor at Fragomen UK, explains to ArabianIndustry how Brexit will impact business investments from the Middle East and the current challenges for ME investors

1. What will happen to EU investors and companies in the UK after Brexit?

The UK has seen a Withdrawal Agreement agreed between the EU and UK, only to be rejected by Parliament. ‘No deal’ preparations are intensifying in the UK and EU, and although Parliament voted that no deal is not a desirable outcome it chose to reject an amendment to proposed Brexit legislation that would have guaranteed protection from a no deal outcome.

Further key votes are expected to take place in Parliament on 27 February. In the meantime, The UK Government has released plans for immigration if no deal is agreed for Brexit, set for 29 March 2019. The policy would apply between Brexit happening and a new immigration system being introduced before 1 January 2021 (‘the interim period’).

Under the policy, free movement will end after Brexit, although, precisely when is not clear as legislative measures will need to be taken and these can take time. The closer we get without a final outcome, the more difficult it becomes for the Government to take the legislative steps required in time for 29 March 2019. European nationals in the UK will be able to continue to enter and to stay and to work for three months.

Those intending to stay for over three months will need to apply for three years of ‘European Temporary Leave to Remain’ – a new category deigned for the no-deal scenario. At the end of the three years they will need to apply for a fresh permission to stay in the UK under the new immigration regime. They will not be able to extend this three-year leave, nor will it lead to indefinite leave to remain in the UK.

The Policy paper clarifies the position of EEA (Norway, Iceland and Liechtenstein) and Swiss nationals – who will also fall under the Policy in the same way as EU nationals. The situation is much more complex for UK nationals in Europe and for UK businesses who need to send workers there after Brexit. Each jurisdiction has been setting in motion their own domestic legislative rules for UK nationals.

2. How is Brexit going to affect business investments from the Middle East?

Whilst the current uncertainty is worrying for businesses, a resolution to the current no deal concern would allow them to redirect resources that have gone into no deal contingency back into planning for a new trade and immigration environment.
The short and long term impact will depend almost entirely on how negotiations conclude, with a transition period and withdrawal agreement providing an interim period of stability whilst the long term and future trade agreements are established.

3. What are the current challenges for ME investors in the UK?

Aside from the current uncertainty around economic conditions, it is very much business as usual in immigration terms for non-EU nationals.

The main point of concern may be the Tier 1 Investor category which is under review after a period of uncertainty as to whether the category was to be suspended. The government has so far stated an intention to offer a route for genuine investors and entrepreneurs but will review the current system with possible changes to investment criteria to encourage active investments and enhanced due diligence checking.

Indeed, the UK government has published its plans plans for the post-Brexit UK immigration system, which is expected to be implemented starting January 1, 2021 and proposes a single, skills-based immigration system, focused on talent and expertise rather than country of origin. The paper talks of continued routes for experienced business people who want to set up a business in the UK that is innovative, scalable and viable; a new Start-Up visa route in Spring 2019, for those at an early stage of their career with an innovative business idea, who can then move into the Innovator route; a flexible route for highly skilled individuals in the creative, arts and humanities, science, research and engineering, and digital technology sectors, who wish to work in the UK; and a continued route for investors who make a substantial financial contribution to the UK.

The White Paper also includes encouraging measures to ease pressures on employers including removing the cap on the number of Tier 2 (General) Restricted visas that can be granted, which is currently set at 20,700 per year divided in monthly increments, removing the requirement for employers to complete a Resident Labour Market Test before sponsoring a foreign worker for a Tier 2 (General) Visa, and a new visa category for low-skilled workers, allowing initial visas up to 12 months that will not require employer sponsorship.

The proposed changes would address a number of key concerns expressed by businesses over the past months, including the anticipated drain of low-skilled workers after Brexit. It would also make the system much quicker – the absence of a cap and labour market testing would reduce the lead time of many Tier 2 (General) Visa applications by two to three months.

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