London Daily

Focus on the big picture.
Monday, Apr 06, 2026

Analysis: The explosive Brexit spat that no one is talking about could slam the UK economy

Analysis: The explosive Brexit spat that no one is talking about could slam the UK economy

Boris Johnson has spent decades agitating against the European Union and the last five years battling to free the United Kingdom from the shackles of regulation from Brussels.
Now he's in the awkward position of finding himself at the mercy of EU leaders for permission to rejoin an international treaty, or risk devastating Britain's multi-billion-dollar legal services industry.

The agreement in question is called the Lugano Convention, and essentially it establishes the jurisdiction of national courts, guaranteeing the legal recognition and enforcement of a wide range of civil and commercial judgments in cross-border disputes.

London is widely regarded as the global capital for international dispute resolution, thanks to England's world-class legal system and courts. It is a broad and highly lucrative industry, dealing with everything from family disputes to international business operations. And a long-term failure to rejoin the Lugano Convention could represent a grave threat to the UK's world-beating legal services sector, as well as creating difficulties for large companies and ordinary people alike.

The UK dropped out of the treaty as a consequence of Brexit, and applied to rejoin in April 2020. Yet, while the non-EU signatory states (Iceland, Norway and Switzerland) agreed to its re-admission, to date the European Commission has recommended that the EU deny this request, and said that the bloc was "not in a position" to give its consent to UK accession.

This is tricky for the British prime minister, both politically and economically. According to the Law Society, legal services added nearly £60 billion ($83 billion) to the UK economy in 2018, while in 2017 exports of legal services hit £5 billion ($6.9 billion).

Scott Devine, from The City UK, a body representing UK-based financial and professional services, says the legal services sector employs over 350,000 people, with two thirds of those jobs outside of London.

These positions are not all in major commercial law firms. The sector, Devine says, "is anything from a big multinational law firm" working on international contracts and mergers to "the high street solicitor sole operator dealing with family issues," such as wills and property.

The reputation of English law has, Devine says, made it the "preferred law of business and international contracts." According to Devine, in 2019, 77% of claims issues in the commercial court had one party from outside England and Wales, while 43% were based entirely externally.

Some of Brexit's most ardent critics are concerned that the failure to join Lugano and the poor relationship between the UK and European countries following Brexit could diminish the standing of this important sector.

Dominic Grieve, the former attorney general for England and Wales, says his concern is the long-term "viability of London as a center for dispute resolution."

He continues that the longer it goes on, "the more potentially damaging it may become, because there's no doubt that the UK, when it was in the EU, was seen as the place of dispute resolution of choice for EU litigation of every conceivable kind."

One problem London now faces is that outside of the convention and no clear sign of a decision any time soon, EU nations can directly compete with the UK capital for business.

"The alternatives are slowly becoming clear for international companies that want to operate in the EU and don't want any blockages," says Josep Galvez, a former Spanish judge admitted to the English bar at Del Canto Chambers in London and Galvez Pascual in Spain.

"This Lugano limbo the UK finds itself in is the worst situation possible as lawyers on both sides have no clarity on what will happen in the long term. I think the EU wants to make the UK suffer and give EU jurisdictions the opportunity to take business from England."

Galvez believes that over time, more difficulties will arise that could undermine confidence in English courts. He points to a recent decision in a Swiss court, where an English ruling was not upheld, which he believes shows "the rough ride ahead for UK judgments to be enforced across Europe ... I'm afraid Brexit has brought a goat trail where there was a highway for UK judgments."

Others are more optimistic. Devine says that "the confidence in our judiciary" which is seen as "incorruptible" and "experts in the commercial field" should mean the UK retains its appeal.

However, Devine and others have wider concerns about the UK's status outside of Lugano.

Catherine McGuinness, policy chair at the City of London Corporation, thinks that the biggest losers will be individuals seeking justice as consumers or in their personal lives.

"I'd be more concerned about the implications for ordinary people, and smaller businesses operating cross border," she says, adding that very big firms will be able to amend their contracts to ensure they still work.

"It's the person who's buying something across borders or considering how to divorce their partner across borders who's going to find that they don't have access to this really pragmatic route to clarify their legal situation."

Sarah Garvey, chair of the Law Society's Private International Law committee, agrees that the strained political relations between the UK and EU won't have as negative an impact on big commercial contracts, but could severely harm those seeking legal recourse as consumers or in family disputes.

"There was initial concern amongst commercial parties that English judgments would be more difficult to enforce in the EU. But they have been reassured by the UK rejoining the Hague Convention and have been adapting their contracts."

Alongside the high business, reputational and individual costs, for Johnson himself, there is also strong potential for personal embarrassment. It would be a political nightmare for the UK's prime minister, an architect of Brexit, to be seen as at the mercy of the very Eurocrats he claims to have saved Brits from in 2016.

"It's politically uncomfortable for Johnson that the EU is starting to react to what it sees as our bad behavior," says Anand Menon, professor of international politics at King's College London.

"Lots of Brexiteers said from the start of the Brexit process that London taking a hard-line stance wouldn't result in retaliation from Brussels. This is one of the first examples where we are being damaged internationally and the EU holds the keys, and it gives us an idea of how much they think our reputation has changed," he adds.

This standoff does appear to be driven by political disputes between the UK and the EU, and critics of both sides are quick to point out that the people this most affects are British and European citizens.

"In cases that involve victims of corporate human rights abuses, business-versus-consumer cases, and family law -- in those cases, the party that has more financial resources may try to introduce arguments about which country should be hearing the case, and whether a UK court judgment can be enforced," says Zach Meyers, a research fellow at the Centre for European Reform. "I think that the Commission's being short sighted by treating this solely as a way to withhold a favor from the UK, because this doesn't just negatively affect the UK, it will affect EU nationals too."

Unfortunately, relations between Brussels and London are dire. The UK is currently trying to renegotiate a key part of the Brexit deal that Johnson himself signed in 2019, which is uniting EU member states against the UK once more.

The UK government's official position remains that it wants to rejoin Lugano. Downing Street says convention is not something that should be policed by the EU and the UK should be admitted as soon as possible. Less humble request to join, more anger at Brussels trying to punish it for Brexit.

A Downing Street spokesperson told CNN: "We maintain that we meet the criteria for accession both because it is open to countries outside the EU and all non-EU members already supported the UK's membership. Supporting UK accession is the sensible and pragmatic solution for all citizens."

This incredibly important issue is likely to rumble for some time. It might not be as exciting as sausage wars or fishermen ramming each other's boats, but over time, the consequences of a poor relationship between London and Brussels will become much more obvious to citizens on both sides.

The question for both parties now: how long can you maintain political stances that ultimately harm your own citizens for the sole purpose of saving face and making a point?
Newsletter

Related Articles

0:00
0:00
Close
UK Considers Deploying Aircraft Carrier for US Independence Day Celebrations Amid Renewed Transatlantic Focus
United Kingdom Moves to Attract AI Firm Anthropic Amid Tensions with US Defense Officials
RAF Intercepts Iranian Drones in Middle East to Defend Allied Security Interests
Labour Signals Shift on Foie Gras and Fur Restrictions to Advance EU Trade Talks
Seven Arrested Near RAF Base as UK Authorities Respond to Protest Activity
Economic Pressures Mount as Analysts Warn UK Growth Is Being Constrained by Policy Burdens
UK Green Party’s Push for Church-State Separation Sparks Debate Over National Identity
Strategic Island Emerges as Growing Challenge for United States and United Kingdom Defense Planning
Pepsi Pulls Sponsorship from UK Festival Following Backlash Linked to Kanye West
Signs Emerge of Declining Enthusiasm for Social Media in the United Kingdom
Security Alert Raised Ahead of Meghan Markle’s Planned Visit to Australia
UK Food Halls Defy Hospitality Slowdown, Emerging as Bright Spot in Challenging Market
UK Sets Firm Conditions for Military Action, Insisting on Legal Mandate and Clear Strategy
UK Medicines Regulator Launches Probe into Peptide Clinics Over Health Claims
New North Sea Drilling Unlikely to Significantly Cut UK Gas Imports, Analysis Finds
Woman Linked to UK’s First All-Female Terror Plot Faces Deportation
Downed US Aircraft Over Iran Linked to Operations from UK Airfield
Two Men and Teen Detained in UK Following Attack on Jewish Charity Ambulance
UK Police Launch Inquiry After Firearms Left Unattended Outside Mayor’s Residence
Giuffre Family Calls on King Charles to Meet Epstein Survivors During US Visit
Amber Wind Warning Issued as Storm Dave Approaches Parts of the United Kingdom
Prince Harry and Meghan’s Australia Visit Set to Draw Heightened Global Attention
UK Considers Entry Fees for Overseas Visitors at Major Museums Ahead of 2026 Travel Season
UK Prime Minister and Kuwait Crown Prince Coordinate Security Response After Regional Escalation
Calls Grow to Expand Fully Paid Maternity Leave for UK Teachers Amid Workforce Pressures
UK Secures Tariff-Free Access to US Market in Landmark Pharmaceuticals Agreement
Trump Projects Strength in Critique of UK Leadership and Naval Readiness
UK FinTech Setback as VibePay and Smartlayer Cease Operations Amid Funding Pressures
UK Leads Global Coalition of Over Forty Nations to Address Strait of Hormuz Crisis
UK Firms Urged to Accelerate Preparation as New Sustainability Reporting Rules Take Shape
UK Moves Rapid Sentry Air Defence System to Kuwait After Drone Strike Escalation
Transatlantic Relations Tested as UK Seeks Balance While Trump Reshapes Strategic Approach
Trump’s Strategic Pressure on UK Seen as Push for Stronger Alignment and Fairer Terms
UK Focuses on Trade Finance to Secure Critical Materials for Defence and Energy Sectors
Majority of UK Businesses Hit by Middle East Conflict While Confidence Holds Firm
UK Royal Navy Faces Renewed Scrutiny as Debate Intensifies Over Capability and Readiness
Reform UK Faces Mounting Distractions as Policy Agenda Struggles to Gain Traction
Investigation Launched Into Northern Cyprus IVF Clinics After UK Families Receive Incorrect Sperm
International Meeting Issues Unified Call to Safeguard Navigation Through Strait of Hormuz
Potential Strait of Hormuz Closure Raises Concerns Over UK Food and Medicine Supply Chains
UK Leads Coalition of Over Forty Nations Urging Iran to Reopen Strait of Hormuz
UK Secures Tariff-Free Access for Medicines in Landmark US Pharma Trade Agreement
King Charles III Invited to Address Joint Session of U.S. Congress in Rare Diplomatic Honor
Debate Grows Over Whether Expanded North Sea Drilling Can Reduce UK Energy Bills
UK Faces Heightened Risk of Jet Fuel Shortages, Airline Chief Warns
UK Ends Police Investigations into Lawful Social Media Posts After Review Finds Overreach
Abramovich Moves to Establish Charity for Frozen Chelsea Sale Proceeds Amid UK Dispute
Starmer Reaffirms NATO Commitment While Responding to Trump’s Strategic Critique
UK Aid Reductions Raise Fears of Severe Human Impact Across Parts of Africa
UK Signals Renewed Push for EU Cooperation as Iran Conflict Reshapes Security Landscape
×