London Daily

Focus on the big picture.
Sunday, Nov 02, 2025

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
King Charles Relocates Andrew to Sandringham Estate and Strips Titles Amid Epstein Fallout
Two Arrested After Mass Stabbing on UK Train Leaves Ten Hospitalised
Glamour UK Says ‘Stay Mad Jo x’ After Really Big Rowling Backlash
Former Prince Prince Andrew Faces Possible U.S. Congressional Appearance Over Jeffrey Epstein Inquiry
UK Faces £20 Billion Productivity Shortfall as Brexit’s Impact Deepens
UK Chancellor Rachel Reeves Eyes New Council-Tax Bands for High-Value Homes
UK Braces for Major Storm with Snow, Heavy Rain and Winds as High as 769 Miles Wide
U.S. Secures Key Southeast Asia Agreements to Reshape Rare Earth Supply Chains
US and China Agree One-Year Trade Truce After Trump-Xi Talks
BYD Profit Falls 33 % as Chinese EV Maker Doubles Down on Overseas Markets
US Philanthropists Shift Hundreds of Millions to UK to Evade Regulatory Uncertainty in Trump Era
Israeli Energy Minister Delays $35 Billion Gas Export Agreement with Egypt
King Charles Strips Prince Andrew of Titles and Royal Residence
Trump–Putin Budapest Summit Cancelled After Moscow Memo Raises Conditions for Ukraine Talks
Amazon Shares Soar 11% as Cloud Business Hits Fastest Growth Since 2022
Credit Markets Flooded with More Than $200 Billion of AI-Linked Debt Issuance
U.S. Treasury Secretary Scott Bessent Says China Made 'a Real Mistake' by Threatening Rare-Earth Exports
Report Claims Nearly Two Billion Dollars in Foreign Charity Funds Flowed into U.S. Advocacy Groups
White House Refutes Reports That US Targeting Military Sites in Venezuela
Meta Seeks Dismissal of Strike 3’s $350 Million Copyright Lawsuit
Apple Exceeds Forecasts With $102.5 Billion Q3 Revenue Despite iPhone Miss
Israel's IDF Major General Yifat Tomer-Yerushalmi Admits to Act Amounting to Aiding Hamas During Wartime (Treason)
Shawbrook IPO Marks London’s Biggest UK Listing in Two Years
UK Government Split Over Backing Brazil’s $125 Billion Tropical Forest Fund Ahead of COP30
J.K. Rowling Condemns Glamour UK Feature of Nine Trans Women as 'Men Better at Being Women'
King Charles III Removes Prince Andrew’s Titles and Orders His Departure from Royal Lodge
UK Finance Minister Reeves Releases Email Correspondence to Clarify Rental-Licence Breach
UK and Vietnam Sign Landmark Migration Deal to Fast-Track Returns of Irregular Arrivals
UK Drug-Pricing Overhaul Essential for Life-Sciences Ambition, Says GSK Chief
Princesses Beatrice and Eugenie Temporarily Leave the UK Amid Their Parents’ Royal Fallout
UK Weighs Early End to Oil and Gas Windfall Tax as Reeves Seeks Investment Commitments
UK Retail Inflation Slows as Shop Prices Fall for First Time Since Spring
Next Raises Full-Year Profit Guidance After Strong Third-Quarter Performance
Reform UK’s Lee Anderson Admits to 'Gaming' Benefits System While Advocating Crackdown
United States and South Korea Conclude Major Trade Accord Worth $350 Billion
Hurricane Melissa Strikes Cuba After Devastating Jamaica With Record Winds
Vice President Vance to Headline Turning Point USA Campus Event at Ole Miss
U.S. Targets Maritime Narco-Routes While Border Pressure to Mexico Remains Limited
Bill Gates at 70: “I Have a Real Fear of Artificial Intelligence – and Also Regret”
Elon Musk Unveils Grokipedia: An AI-Driven Alternative to Wikipedia
Saudi Arabia Unveils Vision for First-Ever "Sky Stadium" Suspended Over Desert Floor
Amazon Announces 14 000 Corporate Job Cuts as AI Investment Accelerates
UK Shop Prices Fall for First Time Since March, Food Leads the Decline
London Stock Exchange Group ADR (LNSTY) Earns Zacks Rank #1 Upgrade on Rising Earnings Outlook
Soap legend Tony Adams, long-time star of Crossroads, dies at 84
Rachel Reeves Signals Tax Increases Ahead of November Budget Amid £20-50 Billion Fiscal Gap
NatWest Past Gains of 314% Spotlight Opportunity — But Some Key Risks Remain
UK Launches ‘Golden Age’ of Nuclear with £38 Billion Sizewell C Approval
UK Announces £1.08 Billion Budget for Offshore Wind Auction to Boost 2030 Capacity
UK Seeks Steel Alliance with EU and US to Counter China’s Over-Capacity
×