How individuals and companies in Luxembourg prepare for the uncertainty.

Since last June 23, after the UK voted to leave the European Union, questions began to arise about how the Brexit would look like.

No country has left the European Union before, and the rules for exit mentioned in Article 50 of the Treaty of Lisbon, remain short and vague. Around 6,000 Britons live in Luxembourg.

And an estimated 1,000 more commute every day from Belgium, France and Germany to the Grand Duchy.

No major concerns so far

Mike Clarke comes from a small city near Manchester. Since over 18 months, he lives in France and works for International Electronics and Engineering (IEE), a producer of electronic sensors for the automotive, healthcare, building management and sport industries, which is active in seven countries.

When he does not fly for business purposes, he commutes between Contern and Metz, where his wife and children live.

Mike Clarke might have to apply for a visa every time he travels abroad (illustration: Nina Auxenfants Nieminen)

As many British Expats, he was shocked by the referendum outcome, but not surprised. If he worries about the way the UK will manage to exit without too much damage, he does not see any immediate effects on his personal situation.

“As an individual, I am not thinking about any impact on me or on my family right now, as it will probably take at least two years before any concrete implementation of the Brexit.

For the moment, it is still unclear whether the British Parliament will ratify it and how the agreement shall then be negotiated and concluded by the EU institutions”, he says.

Without speculating so far indeed, Clarke anticipates the extra administrative burden and paperwork he will have to face, as he will have to apply for a visa every time he travels abroad. And in case of a hard Brexit, he might need a work permit too.

However, he does not see any consequences on his commuting between France and Luxembourg: “I don’t think I will need to show my passport, every time I cross the border between the two countries”, he explains.

Hence, he hopes that the Britons who have been living in the EU before 2018 (year when the Brexit is foreseen to be completed) would benefit from an “acquis communautaire”, meaning that all the obtained travel/work authorisations and permits will be considered as definitely acquired.

Not sure about the future

Alex Lennie is an English teacher. In September 2013, she joined St. George’s International School Luxembourg, an institution of the British school network overseas. She was born and raised in the North of England.

Last June 23, she was in the UK. She felt sad and upset after the Brexit vote. If it is still too early to figure out the possible outcome, she however thinks that the Leave will impact her life in Luxembourg.

“As an Expat, I might lose my European insurance coverage. I might need a visa to travel to Europe. And I might even lose my job…”.

Many British pupils attend St. George’s. They will certainly have to leave the country due to the Brexit, which could certainly lead to class reductions and Staff layoffs. But the teacher and her colleagues see this risk as limited.

The Brexit will affect her Italian boyfriend too. He lives in London and works in finance. At best he will need a work and residence permit for his stay in the UK, as well as a visa to re-enter the UK whenever he comes to see his girlfriend in Luxembourg.

She fears that he might even lose his job: According to the latest surveys, optimism drops in the UK finance sector since the referendum. And some bankers are preparing to leave the City.

Personally, Lennie does not know where she will be in the coming years. So applying for the Luxembourgish citizenship is not an immediate option. But some of her colleagues, who have been living in Luxembourg for longer, do consider it.

She will see how things develop: “If my situation gets difficult without the European citizenship, then I would possibly quit Luxembourg, unless I have something I am really committed to”, she says.

When she does not teach English, she coaches a basketball girl team in Luxembourg-city. Leaving her pupils and the “girls”, will certainly be a real heart-breaking moment for her.

On June 24, St. George’s made a communication to their staff, she remembers: “A lot of people were quite upset about the results. We got an email from our principal: quite vague but positive.” A wait-and-see-motto, in the purest British diplomatic tradition.

Leaving her pupils and the “girls”, will certainly be a real heart-breaking moment for Alex Lennie (illustration: Nina Auxenfants Nieminen)

Business as usual

At Delphi, June 24 was an ordinary business day. An internal communication was sent from the CEO to the 169,000 employees worldwide, “Taking note of the vote results” and insisting that “No statement could be made so far”.

The mail confirmed that the HQ will remain at this moment of time in the UK. Delphi is a US global supplier of vehicle technology, which is active in 20 countries. The group has its main seat in Troy (Michigan) and is headquartered in London….

Vincent Romiguière is HR Director for the Luxembourg site and has also regional responsibilities for the European activities of two divisions.

He manages a staff of 3,500 people, in the Grand-Duchy, Portugal, Poland and Hungary. 18 of them are Britons.

“After the vote, our British employees haven’t shown any concern, so far”, he says. “Our department did not receive any formal request from them regarding their future with the company and/or how the Corporation will proceed after the Brexit”, he adds.

Business as usual in Delphi Luxembourg (illustration: Nina Auxenfants Nieminen)

For the HR Director and his counterparts in the group, the Brexit is not a top priority of the agenda. His main concern however is the restricted staff mobility this might create.

Work permit required

“When the Brexit will be finalized, our British employees will need a work permit: this applies to the ones we will hire in the future, as well as to those who move to another European site within the group, or even to the non-Britons who will work in the UK”, he fears.

He also hopes that an “acquis communautaire” or a bilateral treaty on workforce mobility, between the UK and other EU countries, where Delphi is present, will be considered to help companies and employees.

Whatever the solution, Romiguière foresees an extra volume of paper work, for the company, which is taking over the work permit and visa formalities of their staff.

As this creates higher management costs and restrictions in terms of staff recruitment and talent acquisition he fears that this might lead to a competitive disadvantage for the group.

However, the HR Director remains in a wait-and-see-position: “I inform myself, I read the press. When we will know more about the negotiations, we will meet with the Chamber of Commerce, the Fedil (the business federation, representing the industry, construction and services sectors in Luxembourg) and the British Chamber of Commerce for Luxembourg (BCC), in order to define a common approach on the different issues that may emerge after the Brexit”, he says.

Neutral but active

One is for sure: When the Brexit outcome will be clear, the latter will be the place most companies will turn to. “As an independent and apolitical organization, the BCC has not supported either side of the debate”, Alison Macleod, its Chairman, explains.

“Our role is to offer insight to our members and the wider Luxembourg community through the expertise and competencies of our 320 members”.

In 2016, in order to get a better understanding of the issue and more visibility on the post-Brexit, the Chamber organized several events with key guest-speakers.

Among others, the British Ambassador (for a post referendum breakfast briefing), Paddy Ashdon, a British politician and former diplomat (on the UK’s sovereignty within the EU), Nigel Farage, the British politician former leader of the UK Independence Party, member of the European Parliament and strong anti-European (on Britain and Europe), as well as David Jones MP, Minister of State at the Department for Exiting the European Union (on the way the British government is preparing the Brexit).

Business opportunities for Luxembourg

“In principle, we have been neutral on this matter. We have not polled our members and it is not our role to represent or promote their views”, Macleod insists.

“However a significant majority of our members do business in the context of the EU single market and the laws and regulations that frame it”.

Hence, the BCC sees some opportunities for Luxembourg, especially in the investment fund industry, where UK finance institutions might move their business to the Grand-Duchy, in order to continue their activities in the EU and worldwide.

If soon or later, the Brexit – who knows? – comes true, whatever the (hard or soft) approach, there is no doubt that the will take the best option out of it, for its competitive differentiation as well as for its British residents.

Brexit, l'effet pschitt