published Jul 24th 2016, 7:00 pm, by Simon Kennedy

(Bloomberg) —
Britain’s divorce from the European Union is not going to be easy given there is no precedent and no planning was done before the historic referendum result. A bit more than one month on, here’s what we know — and what we still have to find out — about the key issues facing investors and executives as officials work out exactly what Brexit will mean.

When will talks begin?

Prime Minister Theresa May must decide when to activate Article 50 of the Lisbon Treaty, which starts two years of talks. While some politicians at home and leaders abroad see a need for speed, May says she won’t pull the trigger before the end of the year. German Chancellor Angela Merkel has given her blessing to the delay, though she’s ruled out preliminary talks either “formally or informally.”

There is some question over whether the prime minister herself has the power to start the process or whether she needs parliament’s consent. The risk for May is that if she lets lawmakers vote, some may try to oppose withdrawal or attach amendments that hamstring negotiations. Government lawyers say it’s up to the prime minister, but Judge Brian Leveson said last week that a lawsuit demanding she consult parliament will be taken “very seriously” and may reach the Supreme Court by December.

What is the post-EU regime?

There are more models than at a Miss World pageant, yet none perfectly fit the demands of both sides, so a new arrangement will probably have to be crafted. Here is a review of some options.

What is known is that the pro-Brexit lobby’s dream of both complete access to the EU’s single market and a crackdown on the free movement of labor is a non-starter for Merkel and French President Francois Hollande.

One idea enjoying attention now is based on the European Economic Area. Rupert Harrison, a former adviser to the U.K. Treasury and now at BlackRock Inc., calls it “EEA Minus.” That would mean the U.K. having “a bit more immigration control and a bit less single market.”

One challenge will be thrashing out a future relationship while breaking the current one. Britain can’t make formal trade deals with other countries until the EU divorce has been completed, and establishing new ties will require the approval of more bodies than the original break-up. So, some kind of stopgap agreements may be needed to cover the interim period.

Will British banks still be able to operate across Europe?

The so-called banking passport which allows lenders based in the U.K. to provide services and raise funds in the rest of the EU is a crucial issue for the City of London.

Executives from JPMorgan Chase & Co. and UBS Group AG have warned that failure to maintain the status quo could force them to cut British jobs.

Deutsche Bank AG sounds even more worried with an internal document reported by Business Insider saying it expects to lose passporting and that it sees a “first mover advantage” for institutions that respond to the threat before the rest of the industry.

Chancellor of the Exchequer Philip Hammond said last week that protecting passporting “will be a very important part” of negotiations.

What trade deals will be struck outside the EU?

Once the U.K. is out it will need its own links with a host of countries that it currently trades with as an EU member.

Trade Secretary Liam Fox is “scoping” out about a dozen pacts, he told the Sunday Times, and Foreign Secretary Boris Johnson said “you can begin to pencil things in.” Brexit Czar David Davis has said there is the opportunity to have a free trade zone “probably ten times the size” of the EU — though skeptics have pointed out the trading zone Davis is imagining is bigger than the whole world economy.

Australia has offered to strike a deal “as soon as possible,” but Fox’s talk of “very fruitful” talks with Canada was quieted when its trade envoy said her priority was still a deal with the EU.

One problem is that the U.K. hasn’t negotiated a trade deal alone since the early 1970s and so lacks officials skilled in doing so. A hunt is underway for lawyers, bankers and management consultants who can help out, but they come at a price.

What happens to clearing of euro-denominated trades?

Clearing firms stand between buyers and sellers, holding collateral from both, in case a member defaults. London’s role in the $493 trillion derivatives market came into focus last year when the U.K. won a court case to fend off the European Central Bank’s bid to shift euro-denominated clearing into the single-currency area.

Brexit will give European financial centers a renewed impetus. French President Francois Hollande has argued EU member states should prepare to take it back. German officials countered that Paris is dreaming if it thinks it can beat out Frankfurt, the home of the ECB and Deutsche Boerse AG’s Eurex operations.

What happens to EU nationals in the U.K.?

May says she wants to guarantee the rights of EU citizens living in Britain, so long as she receives similar assurances from Europe about Britons on the continent. This could take a while given the lack of formal talks. Davis told Sky News last week that he wanted to reach a “generous settlement” for European citizens already in the country. He added that a time limit could be imposed which may see the right to remain taken away from newer arrivals. Hollande said last week that Britons will be able to “spend as much time as they wish” in France.

What does Brexit mean for data protection?

EU regulators passed two major pieces of privacy legislation over the last few months that will force the U.K. to match those same higher standards or risk being an obstacle to companies. In July, a new trans-Atlantic data transfer tool came into force, under which multinational companies can ship over personal information from Europe to the U.S.

The U.K. may have to negotiate its own accord with the U.S. to keep the flow of data as free and as safe as possible from Europe. It may also have to bring its data protection rules in line with a much stricter EU privacy law that will take effect across the EU in 2018. The law, sealed in a deal in December, will give EU data watchdogs for the first time the power to levy fines on companies from banks to U.S. technology giants of as much as 4 percent of their global annual sales for privacy violations.

–With assistance from Charlotte Ryan and Stephanie Bodoni. To contact the reporter on this story: Simon Kennedy in London at skennedy4@bloomberg.net To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Kevin Costelloe, Ben Sills

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