Brexit would cause legislative chaos

Brexit would cause legislative chaos, which could severely damage trade and foreign direct investment.

The reason for this is simple. In order for trade to flourish, there must be legal certainty – society and businesses must know and understand the legal framework in which they are operating. Without this legal certainty, foreign direct investment collapses, and trade grinds to a halt. If the UK left the EU, and EU law ceased applying to the UK, then the UK legal framework would have to come from UK law alone.

Although to the Leave campaign this is one of their most desirable objectives, it ironically causes a major problem because of the way in which EU law works and how it is implemented at national level.

Under the EU legislative system, there are two main ways in which EU applies – through either Regulations or Directives. Regulations, once passed at EU level, apply automatically across every EU country, without having to be passed as law at national level, as do decisions, and other EU legal instruments. Directives, once passed at EU level, have to be implemented by national legislation as well; Directives implemented by UK legislation consequently form part of the UK legal system, whereas Regulations do not.

Unfortunately, Directives only make up a very small part of the EU law affecting the UK, as the following table demonstrates.

What is very clear from the above table is that if the UK left the EU, withdrawing from it altogether would leave a huge legislative black hole, which would need to be filled by implementing all existing EU law into the UK legal system. There are two ways that the UK can do this, by passing all of these missing legislative acts as statutes or Acts of Parliament, or by using some form of delegated legislation, such as statutory instruments.

On average, the UK passes between 60-100 Acts of Parliament or statutes each year, so repatriating EU law in this way would involve the work of years. In the meantime, there would be significant legal uncertainty, which is bad for business, trade, consumers and society in general.

Given enough time, it would be possible to plug those legislative gaps. But to get an idea of the amount of time it would probably take, one can look at the amount of time that it takes for a country to join the EU. This involves aligning a country’s laws with EU law, and is a process that can take anywhere between 10-20 years. Pulling out of the EU would involve a reversal of this process, and would in all probability take the same amount of time.

Whilst it would be possible for the UK Government to repatriate these laws using statutory instruments, this is not without its problems. The UK government passes on average 2000 statutory instruments each year, and the maximum it has passed in recent years is 3486 in 2014. This suggests that the UK Government would perhaps have the capacity to pass an extra 2000 statutory instruments each year, in which case the process would probably still take close to a decade.

Furthermore, statutory instruments are not debated in Parliament and are usually passed without discussion, which means that the UK population could easily end up with even less democratic input into legislation than we currently enjoy. EU Regulations pass through a stringent oversight procedure, being passed ultimately by the elected European Parliament and the Council, which includes our government ministers. Statutory instruments on the other hand are able to be changed by the Minister named in the parent Act, which gives them the power to make changes with very little parliamentary scrutiny. As it is, statutory instruments have been criticised recently for being anti-democratic and an abuse of power, as seen recently when the UK Government scrapped student grants without debate, using statutory instruments.

If one of the aims of withdrawing from the EU is to reduce the democratic deficit by repatriating the law making process, it would seem less than ideal to exchange a transparent, if more distant process, for a distinctly opaque domestic system.

Despite all the passionate rhetoric coming out of the Leave campaigns, arguing that Britain should pull out the EU altogether, the reality is that rapid withdrawal from the EU would result in legislative carnage, which would in all probability lead to economic and social chaos and the imminent risk of collapse of trade and/or foreign direct investment.

For example, the UK economy is underpinned by the money generated by the City of London. The legal framework that the City operates in includes the following Regulations, al number of which would cease to apply in the event of Britain pulling out of the EU altogether and repealing the European Communities Act 1972. These include the technical procedures that take place every time there is a credit transfer or a payment is made, the rules that apply to short selling and credit default swaps, the rules relating to transactions in the euro, and the system of oversight that applies to the banks.

How would the City carry on trading, if the legal rules that underpin the daily financial transactions that the City makes thousands of times each day, suddenly stopped working in a legal sense? These are serious questions, and the British public should be given serious answers to these questions before the referendum on the 23^rd June if they are to make an informed choice.

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