What effect will Brexit have on Yachting and the yacht industry?

We can all remember the scene, as boats of all sizes made up the floatilla on the Thames ahead of the UK’s vote on EU Membership in June 2016. The many vessels taking part displayed banners that supported both the Leave and the Remain campaigns. Since the referendum though, what has been the impact for yacht owners and the yachting industry and will there be any significant impact as the UK Government raises anchor and sails away from the European Union?

Taking the politics away from the issue – which is difficult, but we are going to try – the UK’s decision to trigger Article 50 of the Lisbon Treaty is a big deal.  For any nation to extricate itself from the legislature and trading block area of the EU, means a potentially huge impact, not only on the citizens of that country, but on commercial activities too.  This is of particular concern for UK companies relying on exports and those involved in industries that are inextricably linked with overseas trade, such as travel and tourism.

The first thing to remember is that the negotiations between the UK and EU will be lengthy. There’s a two-year period allowed for negotiations, which can be extended if necessary. Needless to say, it could be several years before the final picture is clear and the outcome of negotiations is known. 

The obvious – and headline-making – initial response to the referendum result was a depreciation in the value of sterling. This brought a positive impact for UK companies that export overseas, where exchange rates were now in favour of the buyer and many of them saw an increase in sales. In contrast, UK companies that import parts and technology, or pay for licences from overseas, quickly saw costs begin to increase.

So, what could the future bring, post-Brexit?

For yacht owners and charter companies operating across Europe, any impact on operations will depend on the agreements reached during the Brexit negotiations. Whilst visas are not likely to be an addition to the paperwork required at ports, stricter passport control is likely to apply. This could mean a return to collecting stamps in passports and for frequent travellers, it could be a case of making sure there are enough clear pages in the passport before setting off on a voyage.

There is also the issue of healthcare arrangements across Europe for British travellers, who now have the benefit of the EHIC, or European Health Insurance Card, giving them free or cheaper treatment in EU Countries. There may be a subsequent increase in the cost of travel insurance, if the EU and British negotiators cannot work out a compromise deal to continue the system.

Currently there are many British yacht crew members, who base themselves at Antibes or Palma de Mallorca, in order to pick up their next charter. Vessels are bound by the regulations of their flag state, however crew welfare is an international issue, regulated by the Maritime Labour Convention, (MLC) which means that general health and safety at work, welfare and employment rights will continue to be covered.

For those who work on vessels, it really is a case of having to wait and see, as there are so many issues for the respective parties to come to agreement on. Uncertainty around the issues discussed above will be a concern for yacht crew, but given that there is a significant grace period whilst negotiations are ongoing, there’s no sense of urgency – or need to panic – just yet.

One potential red flag, if you’ll pardon the expression, is the status of UK flagged yachts, once Brexit has happened. Currently the UK is part of the EU and therefore can trade freely across Europe. Once that is no longer the case, the key question is, ‘what will be the status of vessels registered under the UK Red Ensign?’ Currently this is unclear. There may be an impact on commercial activities and chartering, with UK flagged vessels getting tangled in red tape and additional administration; no longer being able to trade as easily and freely as they once did.

The costs of things such as insurance could also change as there is currently a lack of clarity around the potential impact on insurers who operate across the EU. Lloyds of London has already announced that it has contingency plans in place and will be ready to trade from within the EU, as soon as the UK exits, with an EU-based office already being set up in preparation.

The financial sector relies on ‘passporting’, which allows banks and other financial institutions to carry out business across the EU. Lloyds’ Chief Exectuive, Inga Beale told The Guardian that if passporting rights were to be lost, it would cost the insurance giant more than £800m of premiums. There is a possible alternative model of ‘equivalence’ but this would require even more negotiation and could have a huge impact on UK banking and finance.

You will no doubt have noticed that throughout this piece, there has been a lot of non-committal talk, where we say “could” and “may” which to be fair, is unavoidable at the moment. These cautionary words will be found anywhere that discusses the potential result of the UK’s exit from the EU. In the short term, there will be little change, but longer term? Just yet, who could say?