London Daily

Focus on the big picture.
Monday, Jul 20, 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
London’s Housing Starts Collapse as Planning and Building Costs Stall Development
Charlie Sheen’s Daughter: "My Dad Didn’t Buy Me a House, My Breasts Bought It"
Vivienne Westwood Casts Cicciolina, 74, in Its New Autumn Campaign
Dejavu: Germany’s Military Expansion Reshapes Europe’s Strategic Balance With France
Jingye Demands Full Compensation After Britain illegally Nationalized British Steel
Morgan Stanley Builds a Wall Street Lead in AI Infrastructure Finance
High Prices Push Coffee Drinkers Toward Whole Beans and Home Brewing
Trump Draws Boos and Podium Scrutiny at Spain’s World Cup Triumph
Brilliant move: Péter Magyar Moves to Nominate Chess Grandmaster Judit Polgár as Hungary’s President
Spain Defeats Argentina in Extra Time to Win Second World Cup
Police Block Cockroach Janta Party’s March to Parliament as Education Protests Intensify
Current AI Seeks to Build an Open Global AI Infrastructure Outside Big Tech Control
Turkey Explores S-400 Transfer to UAE in Bid to Rejoin F-35 Program
Josh Kerr Breaks Twenty-Seven-Year World Mile Record at London Diamond League
Thames Water Crisis Deepens as South East Water Outages Hit Thousands in Kent
EU Ban on Destroying Unsold Clothing Forces British Fashion Brands to Change Operations
UK Government Confirms Existing North Sea Oil and Gas Licences Will Be Honoured
UK Covid Inquiry Finds Nearly Ten Billion Pounds Lost in Pandemic Protective Equipment Procurement
Thames Water Moves Toward Possible Temporary Nationalisation Amid Rescue Plan Dispute
Andy Burnham Cancels One Point Eight Billion Pound Digital ID Programme After Taking Office
UK Government Takes British Steel Into Full Public Ownership to Protect Jobs and Supply Chains
Andy Burnham Becomes UK Prime Minister and Pledges Focus on Living Costs and Public Services
Germany’s Economic Malaise Reopens the Sunday Shopping Debate
Singapore Considers Lower Taxes for Fund Managers as Hong Kong Intensifies Talent Contest
US Retaliates Against Iran After Two American Troops Killed in Jordan
Bank of Asia BVI Enters Court-Supervised Liquidation After Regulators Find It Insolvent
Proposed U.S.-Saudi Nuclear Pact Could Permit Limited Uranium Enrichment Under International Safeguards
Netherlands Declares Water Shortage Emergency After Drought Pushes Rivers to Historic Lows
Why Kentucky Fried Chicken Became KFC—and Why the False Explanations Persist
Iran Claims It Destroyed Bahrain’s Main Artificial Intelligence Center in Missile and Drone Strike
Ukrainian Drones Strike Wildberries Warehouses Deep Inside Russia
Brothers Andrew and Tristan Tate Who Turned "Toxic Masculinity" Into a Brand Arrested in Miami as Britain Seeks Their Extradition
Reported CIA Mission Helped Clear the UAE’s Path to Advanced US AI Chips
Artificial Intelligence Capital Fuels Markets While Governments and Regulators Face Mounting Strategic Tests
China’s Moonshot’s Kimi K3 Narrows the Gap With Anthropic Through Scale, Openness and Lower Cost
Gold and Cash Seizure Puts Indonesia’s Senior Anti-Corruption Prosecutor Under Investigation
The Ledger Will Not Trust on Faith
Bank of England Warns Climate Shocks Could Trigger Sudden Asset Repricing
UK Treasury Places Microsoft, Google, AWS and Oracle Under New Financial Resilience Rules
Scottish Government Faces Pressure Over Delays in Vulnerable Group Background Checks
Crown Prosecution Service Authorises Additional Charges Against Andrew and Tristan Tate
NHS Approves At-Home Cancer Treatments for Rare Blood Disorders
Bank of England Gains Oversight of Major Cloud Providers Supporting UK Financial System
UK Government Plans Major Overhaul of English Local Councils Through New Unitary Authorities
British Steel Nationalisation Dispute Escalates as Chinese Owner Jingye Seeks Compensation
Bank of England Signals Interest Rates Will Stay High as It Warns of Financial Risks From Climate and AI
Trump Administration Pressures Banks to Restrict Financial Access for Undocumented Immigrants
Passenger Bound for Germany Refused to Sit Beside a Woman on a Plane — Then Slapped a Flight Attendant
Ukraine’s Leadership Rift Spills Into the Streets as Protesters Target Army Chief
Ukrainian Drone Barrage Kills Eight and Strikes Russian Logistics Network
×