(Sakinah The Series 5)

The Brexit Battle: Fish for Finance

By
Nursilah Ahmad

Prologue

June 23, 2021. This date marked five years to the day since the people of the United Kingdom
(UK) voted in a referendum to leave the European Union (EU) after 44 years of membership.
On January 1, 2021, the UK officially left the EU. However, many issues were not settled yet,
and central among them were fishing rights and financial services deals. Due to the Article 5
provision, UK could be granted up to two years transition period. Therefore, negotiations
process could be prolonged until the end of 2021, or even 2022.

Sakinah was the Chief Financial Officer (CFO) of Cagamas Berhad (Cagamas). Cagamas,
the National Mortgage Corporation of Malaysia, was established in 1986 to promote the
broader spread of house ownership and growth of the secondary mortgage market. The
company issued sukuk to fund Islamic financing related to affordable housing in the domestic
and global market.

The unsettled financial deals might affect London’s position as the Islamic financial hub in the
West. The top management wanted to know if London was going to be the European financial
centre in the future, post-Brexit. If she knew the answer to this question, she could propose
the solution in the next Board meeting, which was scheduled in two days’ time.

Introduction

The EU was an economic and political partnership involving 28 European countries, including
the UK. The union was founded in 1993 and was created to foster economic cooperation. No
country had ever left the 28-member EU. However, things were about to change.

In June 2016, Britain held a nationwide referendum on whether it should leave the EU. The
UK citizens felt that the union had infringed on British’s national interests in issues, such as
trade, fishing rights, financial, and social spending. The result of the referendum was a close
tie. Fifty two percent of the UK voters elected to leave and 48 percent voted to remain.

The Exiters (those who voted to leave) felt that the EU was remote and imposed too many
rules on businesses. The Union charged billions of pounds a year in membership fees for little
in return. One key point of exiting the EU was to regain control over the UK’s water rights.
Fishing contributed around 0.02 percent to the overall UK economy in 2019. The contribution
of fishing to the EU was also small. However, in many coastal communities, fishing provided
thousands of jobs. It was symbolic to the island country.

On the other hand, the Remainers (those who voted to stay) said that membership with the
EU boosted trade with other member countries. One of them was trade in the financial sector.
According to the Office for National Statistics, fishing contributed the sum of £437 million to
the UK economy in 2019. In comparison, the financial services industry totalled to £126 billion.

In 2020, Britain decided to leave the EU. However, it had a transition period of negotiating the
next term. By end of June 2020, a decision had to be made whether to extend the transition

1
period or not. The withdrawal agreement included the option to extend the negotiation period
for one or two years, but that decision must be made by July of the same year.

If the two sides could not reach an agreement by the year-end, Britain would leave the EU’s
single market and customs union without a trade deal in place. No trade deal meant additional
costs in doing business due to the imposition of tariffs and quotas on international trade
between both parties.

Economic Integration

Sakinah consulted Aafiyah, one of the Cagamas’s Research Analyst, on the topic of economic
integration. The EU was an example of an economic integration.

Sakinah: Is it good to have an economic integration?

Aafiyah: Well, it depends on many factors. But let’s look at the definition first. Economic
integration can be regarded as either a process or state of affairs. The
economic integration refers to the flows of trade, capital, labour, and technology
across countries.

Sakinah: What is the objective of an economic integration?

Aafiyah: The most important one is to eliminate trade barriers among nations. The idea
is to bring together the commodity market, financial market, and labour market
together in one place. In addition, the monetary and fiscal policies of the
countries involved have to be integrated. The European Monetary Union (EMU)
is a good example of an integration. The UK, France, Italy, and Germany are
members of EMU.

Sakinah: Is it difficult to form an economic integration?

Aafiyah: Good question! In order to integrate, nations have to go through at least five
different stages. Free trade area, custom union, common market, monetary
union and political union, in that order. It would be a long process. In addition,
it involves harmonizing standards and regulatory frameworks, reducing
restrictions on financial capital and labour mobility, and pooling investment in
cross-border infrastructure, such as transport and communications.

Sakinah: Is there an example of an economic integration?

Aafiyah: The EU is an example of an economic integration. The EU was founded to

facilitate trade within the European economies and to avoid intra-European
conflicts.

Sakinah: Didn’t UK vote to leave EU a few years ago? The Brexit deal?

Aafiyah: On March 29, 2017, UK formally notified EU of its intention to leave. Brexit, the
acronym for the act of Britain exiting the EU, marked a departure from the
economic integration.

Sakinah: What will happen to UK after leaving the EU?

Aafiyah: The separation will affect economic growth due to trade barriers. The loss could
be around 1 to 10 percent of the UK’s per capita income (Duasa & Ahmad,
2020).

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Opportunities and Pitfalls of Economic Integration

The discussion continued with the advantages and disadvantages of an economic integration.

Aafiyah: Let’s take a look at trade agreement first. There are a unilateral, bilateral, or
multilateral type. Each has its advantages and disadvantages that could be
used strategically to benefit both parties. Normally, negotiation in the bilateral
agreement is preferred because there are only two parties involved. In addition,
it would be easier to withdraw from a bilateral agreement.

Sakinah: Is it the same as a multilateral agreement?

Aafiyah: Multilateral agreements can be more efficient due to the economies of scale
and a broader market. Another important benefit of multilateral agreements,
from the perspective of exporters, is accumulation. Accumulation makes it
easier for businesses to establish supply chains with simplified origin rules.
Multilateral trade also provides countries with a more bargaining power.

Sakinah: Ok. Let us move to economic integration. What are its benefits?

Aafiyah: Among the benefits of economic integration are that the member countries
have a wider selection of goods and services not previously available in the
domestic market. In addition, the cost of acquiring goods and services is
smaller due to the removal of trade barriers, such as tariffs, quotas, and
subsidies. There would also be a greater political cooperation and consensus
among member countries to address conflicts and instability that might affect
the region. As integration leads to market expansion, there would be more
investment brought into the country. This means more job opportunities.

Sakinah: I suppose there are disadvantages of economic integration as well?

Aafiyah: Yes. Economic integration has several drawbacks. First, a creation of trade
blocs might increase trade barriers against non-member countries. Second, the
competitive advantage might be lost since union members are required to trade
with member countries even though other non-member countries can produce
at a lower cost. Third, the debate on national sovereignty against economic
freedom. The higher the level of integration, the higher the member countries
have to give up the degree of control over domestic policies, such as monetary
and fiscal policies.

Sakinah: Can you summarize our discussion so far on free trade and economic
integration?

Aafiyah: Depending on the state of economic progress of a country, sometimes the

bilateral approach is the best. At other times, multilateral agreements will be
better. Both approaches are the tools in international trade toolbox. What is
important is a well-informed decision-making process. In other words, before
forming an economic integration, carefully evaluate its advantages and
disadvantages.

Aafiyah reminded Sakinah to study the chronology of the Brexit situation to better understand
the situation. She also mentioned two key issues surrounding post-Brexit negotiations. First
was the fishing rights, and the second one was the trade deal on financial services.

3
The Chronology of Brexit, 2016 - 2020

Table 1 listed the Brexit chronology from 2016 until early 2020. Within these periods, the UK
held two general elections and had three prime ministers.

Table 1: The Chronology of Brexit, 2016 - 2020

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Year Month Event
June 23 The UK voted in a referendum to leave the EU.
The majority of England and Wales voted
2016 ‘Leave.’ Scotland and Northern Ireland voted
‘Remained.’
July 11 Theresa May (May) won Conservative Party
leadership contest and became a Prime Minister
two days later.
July 27 The former EU Commissioner and French
foreign minister, Michel Barnier, was named as
the EU’s Chief Negotiator for the Brexit talks.
Oct. 2 May said she would trigger the EU’s Article 50
by the end of March 2017.
Article 50 was the mechanism to set the formal
exit process in motion.
Nov. 3 The UK’s High Court ruled that the British
government could not trigger Article 50 without
the parliamentary approval.
Jan. 17 Theresa May confirmed UK would leave EU.
2017 March 29 May sent a letter to the European Council
President, Donald Tusk, triggering Article 50.
April 18 May announced a general election in the UK to
be held in June.
May 2017 The European Commission published its
negotiating directives for the forthcoming talks
on the UK’s withdrawal.
June 8 The Conservatives lost their majority in the
general election. May was forced to do a deal
with Northern Irish unionists from the DUP to
stay in power.
July 17 Brexit talks officially got underway in Brussels
between EU and the UK negotiators.
Sept. 22 Theresa May said the UK would honour its
budget commitments and proposed a two-year
post-Brexit transition period.
Dec. 8 Theresa May went to Brussels and had a major
breakthrough in talks on the divorce terms.
March 2 Theresa May gave more hints of compromise in
a speech at Mansion House in London.
2018
March 19 The UK and EU published a draft agreement on
Britain’s withdrawal.
July 6 May revealed the Chequers Plan, named after
the venue, the prime minister’s country
residence. It was based on the previous May’s
outlined policy of “managed divergence” from
EU rules.
July 8 The UK’s Brexit minister, David Davis, resigned
in protest. Foreign secretary, Boris Johnson,
followed suit the next day.
Sept. 21 May’s Chequers plan was labelled as “cherry-
picking” from the EU rules. European Council
President, Donald Tusk, said parts of it “will not
work” and risk “undermining the single market”.
Nov. 25 The UK and the EU strike a deal on the UK’s exit
terms. It was signed off by the leaders of the
other EU27 member states at a summit in
Brussels – but needed the approval of the UK
and European parliaments to take effect.
Dec. 13 Theresa May survived a vote of confidence in
her leadership of the Conservative Party.
2019 Jan. 15 The government lost the first “meaningful vote”
in parliament on the Brexit deal, by 432 votes to
202.
5
Additional Information
The vote was 52 to 48%.
The prime Minister David Cameron,
who campaigned for ‘Remained’, said
he would resign.
Boris Johnson (Johnson) became
Foreign Secretary.
May said: ‘Brexit means Brexit.’
The negotiation for the UK’s withdrawal
terms started.
Article 50 is the only legal mechanism for
a member state of the European Union
(EU) to leave. A short paragraph in the
Lisbon Treaty agreed by all EU member
states in 2009. It lists the steps a country
needs to go through to withdraw from its
treaty obligations.
May said: “No deal is better than a bad
deal for Britain”.
Article 50 set the UK’s departure in two
years’ time: March 29, 2019.
The UK's financial settlement, citizens’
rights and arrangements for the Irish
border were key issues to be discussed.
May developed her vision of the future
UK-EU relationship.
The UK and EU published a joint report
outlining enough progress on key
issues.
UK made significant concessions in
major policy areas, including free
movement, budget contributions, trade
and fishing rights.
Many parts of the agreement was
marked “no agreement has yet been
found”.
The plan was officially published the
following week.
In total, 18 ministers quit over Brexit by
the end of the year.
May’s proposal for the Irish border is
dismissed as illegal by Michel Barnier.
Agreement is sealed after May adapts
her Brexit plan to include an all-UK
customs union with the EU to resolve
The controversial Irish border
“backstop”.
May was forced to promise to step
down before the next election because
people were angry with her Brexit deal.
The incident marked the worst
government parliamentary defeat in the
UK’s history.
Jan. 30 The UK parliament gave May a mandate to go The backstop was part of the draft
back to Brussels to seek “alternative withdrawal agreement negotiated
arrangements” to the Irish backstop. between Theresa May’s government
and the EU. It reflected the situation up
to August 2019.
The “Irish backstop” was an insurance policy in
the UK-EU Brexit negotiations. It was meant to
make sure that the Irish border remained open
regardless of the outcome of the UK and the
EU’s negotiations about their future relationship
after Brexit.
March 12 The government lost the second meaningful vote
by 149 votes, after the UK’s attorney-general
said a hastily-revised deal did not guarantee that
the UK can exit the backstop unilaterally.
March 20 Obliged to do so by parliament, May asked the The next day, EU leaders offered the
EU to delay Brexit from March 29 until June 30. UK two alternative extensions to May 22
if the deal was passed, or April 12 if it
was not.
March 23 Hundreds of thousands of pro-EU protesters
marched in London to demand a second
referendum on the UK’s membership.
March 29 The government lost a third meaningful vote on The MPs (Member of Parliament)
the Brexit deal in parliament, by a margin of 58 unable to find a majority for any
votes. alternative solution, including a second
referendum.
April 10/11 After May requested another Brexit delay, EU The UK could leave the EU earlier if it
leaders at a special summit approved a “flexible” passed the divorce deal.
extension of the UK’s membership, until October
31.
May 23 The UK took part in the elections for the She would remain as the prime minister
European Parliament, obliged to do so as it is until a new leader was in place.
still an EU member. The next day Theresa May
said she would stand down as the Conservative
Party leader on June 7.
May 27 The European election results brought victory to May’s Conservatives and the Labour
the Nigel Farage’s Brexit Party. There was a opposition were annihilated.
strong support for pro-Remain parties.
July 23 Boris Johnson (Johnson) won the Tory The following day Johnson entered
leadership contest after several weeks of ballots. Downing Street as the UK’s new prime
minister.
Aug.19 Johnson issued a formal plea to the EU to ditch The EU refused.
the Irish backstop from the withdrawal
agreement.
Aug. 28 The UK Parliament was suspended for five
weeks, upon advice given to Queen Elizabeth II
by Boris Johnson’s government.
Sept. 3 21 rebel Conservative MPs voted against the The protesters were expelled from the
government in protest at its Brexit strategy of party.
driving the UK towards an exit from the EU by
October 31, with or without an agreed deal.
Sept. 5 Johnson refused to ask for another Brexit Johnson insisted that the UK leave the
extension. EU by October 31.
Sept. 9 The “Benn bill” became law. The Bill prevented the UK from leaving
the EU with no exit deal, without the
parliament’s consent.
Sept. 24 The UK’s Supreme Court ruled unanimously that The House of Commons was reopened
the government’s suspension of parliament was for business.
unlawful.
Sept. 29 The Conservative Party conference opened. The new slogan was: “Get Brexit done”.
Oct. 3 The UK government sent a new Brexit plan to The new plan was rejected by the
Brussels, including the removal of the backstop. European Commission three days later.

6
 Oct. 8 The UK-EU talks took place but collapse amidst The EU Council President, Donald
acrimony. Tusk, accused Johnson of playing a
“stupid blame game”.
Oct. 10 The UK and Irish prime ministers, Boris Johnson EU and UK negotiators agreed to
and Leo Varadkar, announced a “pathway to a intensify talks.
possible deal”, while meeting in the UK.
Oct. 17 The UK and EU announced dramatically that It replaced the Irish backstop, following
they had struck a new Brexit deal, ahead of a a compromise, which sees the UK in
Brussels summit. particular makes concessions over
Northern Ireland.
Oct. 19 British MPs withheld their approval for the deal Another huge pro-EU march took place
until the laws implementing Brexit were in place. in London.
Johnson was obliged to seek another Brexit
delay from the EU.
Oct. 22 Johnson put Brexit legislation on “pause”, citing
MPs’ obstacles.
Oct. 28 The EU agreed to offer the UK a Brexit The offer was formally approved the
“extension” until January 31. next day.
Oct. 29 The House of Commons approved a general Boris Johnson’s repeated requests were
election on Dec. 12. rejected previously.
Dec. 1 Ursula von der Leyen took office as the The new European Council President is
European Commission President, replacing Charles Michel, taking over from Donald
Juncker. Tusk.
Dec. 12 Boris Johnson’s Conservatives won the UK’s Scotland and Northern Ireland were
general election by 80-seat majority. strong anti-Brexit supporters.
Jan. 23 The UK’s EU Withdrawal bill became law. It was a relatively smooth passage
2020 through parliament compared to the
earlier havoc.
Jan. 29 The European Parliament approved the Brexit
divorce deal.
Jan. 31 The UK officially left the EU at midnight CET (11
p.m. UK time).
Feb. 1 An 11-month transition phase began until Dec. Most arrangements would remain the
31, 2020. same. During this period the UK
effectively remained in the EU's
customs union and single market and
continued to obey EU rules.
Source: The abridged version from Sandford (2020).

The Fishing Rights: Our Fish vs. Their Fish

The relationship between fish and finance in the UK dated back to the early 1700s. During this
time, the UK's financial industry was in the same neighbourhood as the centre of its fishing
fleet for a short period of time. The venture capital industry was introduced to finance the high-
risk whaling expeditions. Fishing was the national pride at that time.

There were two key points concerning the UK water rights post-Brexit. First, access to British
fishing waters for European vessels. Second, the EU’s demand for trade penalties if either
side did not comply with regulations. Without any agreement, Britain and the EU would have
to trade based on the World Trade Organization (WTO) terms. The WTO terms indicated that
there would be tariffs imposed on goods imported and exported to and from the UK.

Why was fishing so important to Brexit? It was because it symbolized a major barrier to the
agreement. In the case of fisheries, access to British waters remained one of the important
issues. The fishing rights were the central issues discussed for months. The agreement was
the dispute over how to maximize access, while sustaining marine resources. The talks were
normally held in early of the year to decide the overall volumes of fish both sides could catch.
Following the EU-UK split, if no settlement reached, the UK fisherman would have higher costs
when they exported fish to the EU.

December was also the time for the annual review of fishing quotas, which the UK would have
to abide by, but without voting rights. One company, GT Seafood explained that the UK’s
biggest fishing port suffered from blocked exports and collapsed prices since post-Brexit due
to red-tapes. The bureaucracy involved with exports meant extra costs and extra work.

7
Scotland was removed from the EU against their will because the majority of them voted to
remain within the EU market. Exiting the EU was a big problem for them because the EU
market was seven times bigger than the UK market. The fishing industry between the EU and
UK might be small relative to the Gross Domestic Product (GDP), but fisheries were key to
the negotiations. Table 2 summarized the key points of the negotiations surrounding the
fishing deals.

Table 2: Summary of the Fishing Deals of UK-EU

• EU boats will continue to fish in the UK waters for some years to come
• The UK fishing boats will get a greater share of the fish from UK waters
• The shift in the share will be phased in between 2021 and 2026, with most of the quota
transferred in 2021
• After that, there will be annual negotiations to decide how the catch is shared out
between the UK and EU
• The UK would have the right to completely exclude EU boats after 2026
• The EU could respond with taxes on exports of British fish to the EU or by denying UK
boats access to EU waters
Source: Morris and Barnes, 2020.

Appendices 1 and 2 contained further information on the types and proportion of fishes the
UK exported to the EU in 2019 and the exclusive economic zones (EEZ) for fishing activities.
The UK’s exclusive economic zone was the fifth largest in the world, which came into force in
2014. One study estimated the UK and EU27 (EU member countries after the UK left) fish
catches in pre and post-Brexit scenarios. Based on the estimation, the UK catches could
potentially increase by a net amount of 671,000 tonnes if the EU vessels were banned from
the UK waters (Goulding & Szalaj, 2017).

London as the Islamic Financial Services Hub

Back in 2017, Sakinah already prepared a brief report on the role of London as an Islamic
financial hub. The relevant information was updated and revised. Britain had one of the most
advanced Islamic financial markets due to government support and promotion. The history of
Islamic banking and finance in Britain began in the 1960s and 1970s when several investment
banks offered shariah-compliant services to their Middle East clients. In the 1990s, the first
Islamic mortgages were made available to house buyers in Britain (Ahmad, 2017).

Islamic finance helped funded a few of the construction of several iconic infrastructure
developments in London, such as the 2012 Olympics village, the Shard (the tallest building in
Europe), and the London Gateway. London was recognized as the western hub for Islamic
finance due to its openness, flexibility, and significant Muslim population. Cultural, social, and
educational factors also contributed to the growth of Islamic finance. In addition, several
institutions and universities were offering Islamic finance courses and degree programs
specializing in shariah-compliant finance.

Islamic Finance Post-Brexit

After Brexit, the growth and development of Islamic finance in Britain remained a challenge.
On a positive note, the Islamic finance industry had a well-developed legal, regulatory, and
supervisory environment as well as supportive government policies. Additionally, Britain’s
Islamic financial market was not governed by the EU law. Hence, the impact of Brexit was
expected to be minimal.

8
Nonetheless, Britain stood to lose some assigned EU funding’s for her infrastructure and
economic regeneration projects due to Brexit. These infrastructure projects in sectors, such
as water, energy, transportation, manufacturing, and information technology could potentially
be funded with Islamic financial products, especially sukuk. Various sukuk structures could be
used for the project financing, including the murabaha and salam contracts for the expansion
of sector operations, istisna contract for future project construction, and ijarah contract for
leasing arrangements.

The strength of Britain’s commercial links with the non-EU countries, such as Asia, Africa, and
the Middle East was another reason why Britain’s position as the Islamic financial hub in the
west would not be challenged, according to the watchers. On 16 February 2018, Al-Rayan
Bank PLC was the first UK bank to issue £250 million sukuk, which matured in 2052. Home
purchase plans were used as security, issued through a special-purpose vehicle (SPV) called
Tolkien Funding Sukuk. The SPV was named after the famous British author JRR Tolkien
resident in Birmingham, where Al-Rayan Bank was headquartered.

In March 2021, the UK government issued £500 million sterling of sovereign sukuk, which
matures on 22 July 2026. The second sovereign sukuk was sold to investors in major Islamic
finance hubs in the UK, Middle East, and Asia. Seven years earlier (25 June 2014), Britain
became the first western country in the world to issue £ 200 million sovereign sukuk, which
matured in 2019. The sovereign sukuk used the Al-Ijarah structure, with rental payments on
the property providing the income for investors.

The sukuk market continued to develop because of three factors. First, the growing familiarity
of global investors with sukuk instruments, second, increasing Islamic investment liquidity
looking for sukuk, and third, growing retail and corporate demand for Islamic finance services.
The global sukuk market remains relatively small. The main issuers of sukuk are corporates
and sovereigns.

The growth in issuance in recent years has been driven by the key markets of Malaysia, Saudi
Arabia, and the UAE as well as emerging markets, such as Turkey and Indonesia. Sukuk were
listed on key stock exchanges in Europe, namely, the London Stock Exchange (LSE), Irish
Stock Exchange, and Luxembourg Stock Exchange. Banking accounted for 71 percent of
Islamic finance assets, and sukuk comprised another 17 percent (TheCityUK, 2019).

The Referendum

After the referendum, London lost its appeal as the Islamic finance centre in the West. Shariah-
compliant investors switched to Paris, Frankfurt, or Berlin instead. Leaving the EU could mean
restricted access to the UK financial instructions and vice versa. This could slow down the
growth of Islamic finance in the UK.

Before the referendum, authorized financial institutions, including Islamic finance providers
had the right to carry out their activities in any other EU state with or without a physical branch
once the single market regulations were met. This is known as ‘passporting rights.’ This
allowed British-based banks, investment firms, asset managers, insurers, insurance
intermediaries, payment service providers, and e-money firms a free access to EU markets.

The UK economy contributed about four percent to the world’s economy. In the worst-case
scenario, Brexit might put the European economies into recession. However, an exit would be
highly unlikely. Economists cautioned that Brexit might disrupt trading activities between the
EU and the ASEAN economies, including Malaysia.

There was a worry that once London was no longer part of the EU, there would be increasing
costs in servicing the clients. This would prevent Britain from being a successful base for

9
Islamic finance. Some analysts observed that Brexit would raise barriers to financial services
in the long run. Moving to other locations meant having to comply with other regulations
imposed by the specific location. At present, London was recognized as the established
financial hub with ready talent pools. Most people were not willing to relocate to other cities
besides London.

Richard Burge, Chief Executive Officer (CEO) of The London Chamber of Commerce
mentioned an ‘equivalence’ term to replace the older trade bloc with the EU. However, Brussel
did not agree with the ‘equivalence’ term. Equivalence refers to a decision by one state to
recognize another state’s legal requirements for regulating a good or service, even though
they may not be exactly the same. In practice, this means that a trader needs to only comply
with one set of requirements in both states. This usually applies in a very specific area. It is
most often used in dealing with financial services regulation.

The disagreement would have an impact on financial stability in Europe. The EU could also
prevent the UK financial services industry from getting access to the single market. The Brexit
case highlighted the need for a clear guidance for financial services regulators and
policymakers.

The decision of the UK would have an impact on the Islamic financial market. One
consequence would be raising costs since financial institutions had started to leave Britain.
The Consulting firm EY monitored the big banks and financial institutions in the UK in its
Financial Services Brexit Tracker. The EY Consultant reported that 7,500 jobs have left
London for the EU since the Brexit referendum. The same report indicated that some banking
assets worth trillions of United States dollars (USD) were moved out of the UK to other
countries such as Ireland and Germany.

Epilogue

Near the end of June 2021, it was reported that Paris would delay the EU financial services
deal with Britain until Britain granted European fishermen fair access to UK waters. Britain
missed the agreement on fisheries in June 2020 with the EU and missed again an agreement
on financial services at the end of July 2020. The Covid-19 pandemic did slow down the trade
negotiation process. It was clear that there could be no progress in other areas if the fish over
finance issue was not resolved.

Who would have thought that fishing rights would become the post-Brexit deal’s biggest
stumbling block? Sakinah was at a loss on what should be her recommendations to the top
management.

Acknowledgement

The research is funded by Universiti Sains Islam Malaysia Research Grant. Research Code:
PPPI/FEM/0121/USIM/15121.

10
References
Ahmad, N. (2017). Sakinah The Series 3: Brexit as the Game Changer for Sukuk Market.
Case Writer’s Grant Scheme (CWGS) Research Grant, Universiti Sains Islam Malaysia.
Unpublished Case Study.
Duasa, J. & Ahmad, N. (2020). Regional Economic Integration in East and South East
Asia: Pathway for Convergence. USIM Press: Nilai.

Financial Times. June 24, 2021. UK and EU Agree Deals on Fishing Rights. Accessed on 26
June, 2021. https://www.ft.com/content/3a6d1e9d-e39d-4085-ba7f-be94eb85bbf4

Goulding, I. & Szalaj, D. 2017. Impact of Brexit on UK Fisheries.

10.13140/RG.2.2.22668.21126.

HM Treasury. 25 June 2014. Government issues first Islamic bond. Accessed on June 29,
2021. https://www.gov.uk/government/news/government-issues-first-islamic-bond

Islamic Finance Foundation. 17 Feb. 2018. First British Bank Issues Sukuk. Accessed on 29
June 2021. https://www.sukuk.com/article/first-british-bank-issues-sukuk-
6774/#/?playlistId=0&videoId=0

Kaiser. M. J. October 20, 2016. Brexit, Fisheries and Forgotten History. Accessed on 29 June
2021. https://sustainablefisheries-uw.org/brexit-fisheries-and-forgotten-history/

Mayes, J. & Follain, J. 7 June 2021. EU, U.K. Head for Fresh Brexit Collision Over Northern
Ireland. Accessed on May 25, 2021. https://www.bloomberg.com/news/articles/2021-06-07/eu-

Morris, C. & Barnes, O. 20 January 2020. Brexit trade deal: What does it mean for fishing?
Sustainable Fisheries. Accessed on June 29 2021. https://www.bbc.com/news/46401558
eyes-retaliatory-measures-in-post-brexit-clash-with-u-k

Sandford, A. 30 January 2020. Brexit Timeline 2016–2020: Key events in the UK’s path from
referendum to EU exit. EuroNews. Accessed on 27 June, 2020.
https://www.euronews.com/2020/01/30/brexit-timeline-2016-2020-key-events-in-the-uk-s-
path-from-referendum-to-eu-exit

TheCityUK. April 2019. Global Trends in Islamic Finance and the UK Market. Accessed on
June 29, 2021. https://ceif.iba.edu.pk/pdf/global-trends-in-Islamic-finance-and-the-UK-
market-2019.pdf

SUGGESTED QUESTIONS

1. What was the dispute about?

2. What is the purpose of the EU and how does the UK benefit from the EU membership?

3. What might be the consequences to the fish industries if trade agreements did not exist?

4. Explain the differences between a tariff, a quota, and a subsidy, and the possible impact
to sukuk industry.

5. What would be the possible impact of Brexit on Islamic finance? (e.g., sukuk industry, FDI,
capital market and domestic takaful industry).

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Appendix 1

Note: Under normal circumstances, each country would control access to their Exclusive
Economic Zone (EEZ), which stretches up to 200 nautical miles (nm) from the coast, or to a
maritime halfway point between neighbouring countries.
Source: Morris & Barnes (2020).

Appendix 2

Proportion of UK Fish Exports Going to EU in 2019 (%)

Herring

Cod

All
Shellfish

Mackerel

Salmon

0 20 40 60 80 100

Source: Adapted from Morris & Barnes (2020).

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