Measures to mitigate the social consequences of a no-deal Brexit

SWEDEN - Measures to mitigate the social consequences of a no-deal Brexit

April 2019

The Social Insurance Division of the Swedish Ministry of Health and Social Affairs has submitted a proposal with suggestions aimed at mitigating the consequences for individuals related to the area of social benefits during a transition period if a no-deal Brexit becomes reality. The suggestions would only be applicable if the UK leaves the EU without a withdrawal agreement. 

Background and information

When the UK leaves the EU, it will be considered as a third party country. If the withdrawal agreement comes into force when the UK leaves the EU, a transition period will be initiated during which the UK in practical terms act as a member state. If a withdrawal agreement does not come into force this will lead to considerable consequences. For example, the EU rules on social security coordination will no longer be applicable in a cross-border situation in relation to the UK.  This will have a negative impact on individuals who have exercised the act of free movement within the Union by living or working in the UK and one of the 27 member states.

To counteract the potentially serious consequences of a no-deal Brexit, the proposal suggests a time limited regulation setting out a continued entitlement to social security benefits for individuals who had a right to receive these in the UK at the time of the withdrawal. Furthermore, the proposal suggests a regulation that makes it possible to utilise earned insurance, employment or residence periods or periods as self-employed during the time the UK was part of the EU.  This would be used to calculate the basis for application of benefits in another EU member state post Brexit.  The same applies to the possibility of taking into account income, circumstances, benefits and events that have been received before the withdrawal of membership. In addition to this, the proposal also suggests a regulation enabling costs arising from health care performed in the UK, under EU-regulations, to be compensated during a transition period after the withdrawal.

By establishing a new regulation, individuals will be given the possibility of readjusting as an effect of the UK’s withdrawal from the EU and to ensure individual benefits they already receive. The proposed regulation is suggested to come into force in April 2019 but shall apply from the time of the UK’s withdrawal.
Most of the Swedish people living or working in the UK currently do not receive any social benefits from the Swedish welfare system. There’s also no reliable data on how many EU-citizens receive benefits from Sweden. As no statistics exist covering current benefits for EU citizens, it will make it hard to determine how many people will be affected by the UK leaving the EU without an agreement. The same applies for people with earned periods from the UK. Irrespective of the number of affected people, actions should be taken to enable a reasonable transition for the individuals, but also to make it possible for individuals to utilise the earned period in the UK. 

BDO comment

The consequences of a no-deal Brexit will have an immediate impact and will have a significant effect on individuals. It is however, hard to foresee the consequences in advance. A withdrawal agreement has been considered to provide continued security and predictability for the member states, institutions and individuals exercising free movement. It is also considered difficult to predict the financial consequences of a no deal Brexit, but it is possible to say that a no deal Brexit will imply burden on the Swedish authorities and institutions.

The proposal is welcomed and would most likely ease the situation for those who would have been affected by a no deal Brexit. The transition period which is suggested in the proposal would also give those concerned more time to prepare their social security before the withdrawal is final. BDO Sweden will follow the progress in this matter.  

Carl-Johan Söderberg

Lena Gewers