Brexit: 5 things the yachting industry needs to know

The result of the recent Brexit referendum, in which Britain voted to leave the European Union, has led to a great deal of uncertainty within the yachting industry. Despite widespread conjecture, we still don’t know what the consequences of this historic vote will be or how it will impact the superyacht market.

There are a number of burning questions we need to ask before we can speculate on what Brexit means for the superyacht industry. We asked a number of leading figures what they think are most vital issues we need to understand in order to make sure our interests are considered when negotiations begin.

Firstly, we need to know when Britain will leave the EU, and how. “It will be challenging for the negotiators,” said John Leonida, partner at international law firm Clyde & Co. “I have no expectations that there will be a specific superyacht negotiation team, but perhaps there should be, given the major presence the UK and British nationals have in the European superyacht sales and services space.”

One of the immediate consequences of the Leave vote was a marked dip in the value of sterling in currency trading markets, and there’s good reason to believe that a weaker pound will stick around, according to Jonathan Mealey, director of global currency account specialist Centtrip.

“Markets hate uncertainty and until there is a greater understanding of the timing of key events, the impact on trade and a resolution to the current turmoil across all major political parties, the currency market will remain volatile,” he said.

A devalued pound would have numerous knock-on affects on the UK superyacht industry, but not all of these are negative. Manufacturers who rely on foreign imports would see their costs rise, but those with a strong export market for their products will conversely benefit from goods and services priced in sterling appearing more affordable in a global context.

In terms of brokerage, buyers with sterling liquidity will find foreign yachts more costly to buy than they did before the referendum. For example 85 metre Lürssen superyacht Solandge, which is currently for sale and asking €169,000,000, is now over £14 million more expensive in real terms to a buyer paying in sterling than it was before the referendum. On June 23 the asking price was the equivalent of £128,916,113, whereas by July 5 that sum had risen to £143,341,815.

One of the key points for debate during Brexit negotiations will be freedom of movement for workers, and any restrictions on this will have a knock-on effect on the superyacht industry. Will UK-flagged yachts or British crew based in the EU still be bound by the EU employment law, for example?

Leonida points out that EU-flagged yachts are entitled to cabotage rights, meaning they can engage in trade anywhere in EU waters. However, with Britain planning to remove itself from the EU, this could affect the ease with which UK-flagged yachts can be chartered out on the Continent (and most importantly, in the Mediterranean).

“The status of the UK Red Ensign, in all its iterations, is unclear”, Leonida added. “Will it be a clear foreign flag with no right to operate commercially in EU waters? It will be particularly interesting to see how Spain will treat Gibraltar flagged yachts.”

Another key issue to consider is that of customs — would a post-Brexit Britain still benefit from the EU Customs Union, or would import and export levies have to be factored into the equation?

Furthermore many EU-based UK nationals face an uncertain future; from crew and brokers to lawyers, bankers and tax advisors.

The situation is no clearer when it comes to insurance, as Leonida explained: “Insurers can currently conduct cross-border business without requiring further authorisation. Post-Brexit, UK insurers may be required to establish EU-based branches in order to underwrite business in the respective territories. We could see UK-based insurance companies seeking to establish themselves in key member state markets.”

In his resignation speech, David Cameron stressed that the UK is “a great trading nation with our engineering and our creativity respected the world over”, and this is certainly true amongst the superyacht industry.

However, Dickie Bannenberg, company leader at London-based studio Bannenberg & Rowell, sounded a note of caution: “I honestly think it’s too early to say what the consequences are. In theory, as designers, we may not see much change other than the obvious consequence of currency movements. The unknown is how perceptions of the UK may change, from clients, from European shipyards, or both.”

Howard Pridding, chief executive of British Marine, added: "We are currently reviewing all the relevant EU regulations and directives and will be working with our associations and fellow representative bodies, such as the RYA, to ensure that the Government’s newly formed EU Unit takes the industry’s interests into account."

A spokesperson for British Marine advised any members with Brexit-related concerns to submit their queries to the industry body's external relations and technical support teams.