UKs Brexit bid to diverge from EU faces formidable constraints – POLITICO.eu

LONDON The U.K. faces significant challenges in shouldering the burden of regulation it had previously outsourced to Brussels, the government has been warned.

A new report by the UK in a Changing Europe think tank says the fresh autonomy provided to the U.K. by the Brexit trade deal will lead to duplication of many of the EUs rules. But it finds British regulators may not have enough resources to do the job.

Britains post-Brexit regulatory cooperation with the EU is expected to vary significantly depending on the sector, with differing approaches in chemicals, agriculture and aviation.

The report, written by a host of specialist academics, warns that many British regulators, unused to these fresh powers, may lack the money and manpower needed to make effective use of them, while also losing access to formal networks for cross-EU collaboration.

A lack of industry appetite could meanwhile constrain big moves to diverge from Brussels' regulations, the think tank argues.

Some British regulators will simply take on powers of their EU counterparts and duplicate their activities, but others will have to collaborate with Brussels to maintain equivalent standards and some will need to share data and intelligence with one another.

Without correct legislation in place, many U.K. bodies were not ready to assume their regulatory responsibilities on 1 January 2021, the report says.

The think tank points to the U.K.'s pledge to set up a new Office for Environmental Protection post-Brexit. The Environment Bill establishing the new watchdog was not made law before the end of the transition period. As a result, it says, the Interim Environmental Governance Secretariat is little more than a postbox within the Department for Environment, Food and Rural Affairs, creating a gap in government accountability.

The authors also warn that duplication will add to businesses' costs in a host of areas, with personal data a major concern. If there is a data breach that crosses borders, firms will have to notify both the U.K.s Information Commissioner's Office, and at least one EU supervisory authority. Each body could also investigate and impose sanctions, including fines.

The report says this move has already triggered a transfer of user agreements by some of the worlds largest tech companies, including Facebook and Google, from Britain to their headquarters in California, beyond control of European Union data protection regulators.

Mergers and acquisitions are also flagged as an area of fresh duplication. Before the Brexit trade deal, companies had to comply with either the U.K.'s Competition and Markets Authority (CMA) or the European Commission, but now if they have cross-border business interests, they will likely have to comply with both regimes.

The U.K. has assumed huge regulatory responsibilities, but it is not clear that U.K. regulators are sufficiently powerful, have the right resources or can develop the necessary expertise to perform effectively even in the medium-term, said Professor Hussein Kassim, a senior fellow at UK in a Changing Europe, in a statement. Although the U.K. has gained regulatory autonomy in theory, it faces formidable constraints to diverge in practice.

A U.K. government spokesperson said better regulation would be a key part of making the most of opportunities outside of the EU, and highlighted the new Better Regulation Committee to be chaired by Chancellor Rishi Sunak.

They added: "Changes to our regulation will be considered through parliamentary and public scrutiny as usual and will always be in the best interest of UK citizens and businesses.

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UKs Brexit bid to diverge from EU faces formidable constraints - POLITICO.eu