Category Archives: Brexit

The Cabinet Office run by Michael Gove has been officially reprimanded by the UK Statistics Authority for using unpublished and unverifiable data in an attempt to deny that Brexit had caused a massive fall in volumes of trade through British ports.

The criticism follows a story in the Observer on 7 February that cited a survey by the Road Haulage Association (RHA) of its international members showing export volumes had dropped by a staggering 68% in January through British ports and the Channel Tunnel.

The RHA wrote to Gove at the time saying: Intelligence that we are collecting on an ongoing basis from international hauliers suggests that loads to the EU have reduced by as much as 68%, which can also be evidenced by the increased number of empty trailers which are not currently considered in the statistics.

The RHA also accused Gove of failing to heed its warnings that trade would be damaged unless there was a dramatic increase in the number of customs officials.

The Cabinet Office had responded to the Observers story with a point-by-point rebuttal of the RHAs claims on its website, stating that inbound and outbound flows (across all UK ports) were close to normal, at 95% outbound and 96% inbound, in spite of the impact of Covid lockdowns on trade.

But in a letter to Richard Laux, chief statistician at the Cabinet Office, sent on Friday following an investigation Ed Humpherson, director general for regulation at the Statistics Authority, expressed serious concerns at the way the department had used data to rebut the RHAs information.

The letter said the Cabinet Offices strong rebuttal contained claims based on unpublished data, and as such these figures cannot be verified. It is our expectation that any data used publicly by government should be published in an accessible form, with appropriate explanations of context and sources.

While Humpherson suggested that the Cabinet Office has given assurances that it would provide more information about where its information came from, he added: The Cabinet Office should consider how, in future, it can be more transparent through the release of data.

For example, it should ensure that where there is a significant reason to use unpublished management information in a public statement, the underlying data is published before or at the same time as the public statement. If there is continued or anticipated public interest in the data, it should consider whether there is need for a new ad hoc or regular statistical release.

The authority, which is independent of ministers, has a statutory objective to safeguard the production and dissemination of statistics by government. Its terms of reference state that it will intervene (raise concerns) if official statistics in a document or statement are presented in such a way that, in the authoritys opinion, they are liable to mislead the public or undermine the integrity of official statistics.

Rachel Reeves, shadow minister for the Cabinet Office, said: Our British businesses are under huge strain from the pandemic and reams of costly new red tape as a result of the governments deal with the EU the government should spend less time arguing with our businesses and spinning against them, and more time working with them to help.

Trade experts and industry sources said ministers had deliberately tried to deny there was a serious fall-off in trade caused by Brexit by claiming that flows of lorries had been largely unaffected, rather than the volume of goods contained in them.

The RHA had made clear, however, that it was referring to the volume of goods carried, and stressed that very high numbers of lorries which travelled to and from the UK were returning to the continent empty because of problems faced by UK exporters as a result of post-Brexit rules and regulations. Industry sources said last night that while there had been an improvement since January, there was evidence that the number of lorries returning empty to the EU was still around 50%.

The first official statistics on the level of trade to and from the EU since 1 January are due to be published later this month.

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UK Statistics Authority rebukes Gove over Brexit figures - The Guardian

As an instrument of foreign policy, economic sanctions have become the preferred choice for many countries to exercise their political will over other nation states. Their use has increased over the past 20 years, which is not surprising given the lessons learnt from various military interventions in the Middle East.

The imposition of unilateral sanctions by one country over another usually has only a limited effect in achieving foreign policy goals. Although sanctions invariably take time to have a measurable impact that might change behaviour, they tend to be much more effective when implemented by a number of countries acting simultaneously in a coordinated way. Such collective efforts can then restrict the sanctioned country in terms of its capacity to sell goods and commodities or to procure certain goods and services both of which can encourage changes in behaviour.

The EU currently has over 40 different sanctions regimes in place. According to the European Commission, restrictive measures (sanctions) are an essential tool in the EUs common foreign and security policy (CFSP), through which the EU can intervene where necessary to prevent conflict, or respond to emerging or current crises. The Commission states that in spite of their colloquial name sanctions, EU restrictive measures are not punitive. They are intended to bring about a change in policy or activity by targeting non-EU countries, as well as entities and individuals, responsible for the malign behaviour at stake.

EU sanctions can target governments of non-EU countries because of their policies, as well as companies, groups or organisations such as terrorists, or individuals supporting the targeted policies through the following measures: arms embargoes, restrictions on admission (travel bans), asset freezes, and other economic measures such as restrictions on imports and exports.

Prior to Brexit, the United Kingdom was a key player in the CFSP, together with France and Germany, in formulating sanctions policies at an EU-wide level. Once adopted by the European Council, these policies applied across all EU member states.

The close relationship which the UK has long enjoyed with the United States, both historically and currently the most prominent implementer of sanctions, also put the UK in an ideal position to co-ordinate US and EU sanctions policy at a European Level.

But post Brexit, things have changed and will continue to do so. Despite the trade deal agreed last December, considerable uncertainty remains in several areas concerning Britains future relationship with the EU. Certainty does, however, exist in relation to the EU sanctions regime: it no longer directly applies to the UK, which is now free to formulate and implement its own sanctions policies under powers granted by the Sanctions and Anti-Money Laundering Act 2018 (SAMLA). According to the UK government, this legislation has enabled us to transition existing EU regimes into UK law and establish UK autonomous regimes.

So how might autonomy over sanctions policy look in practice? Now a lone wolf on the world stage, it will be interesting to see if the UK continues to shadow EU sanctions policies (to which it can no longer contribute as a member of the EU), or intentionally diverges from them. The countries which are subject to sanctions may not be too concerned about them being imposed by the UK acting alone, given the size and scale of its economy. Whereas sanctions imposed by much bigger economies, such as the EU and US, would have much greater clout. There is, therefore, a question mark over whether the UK will be able to continue to exercise its soft power in world politics, just as it did as a big player in the European Union. Some commentators suggest that the UKs role will diminish as it becomes a small global player, which will be forced to follow the lead of bigger actors such as the US or the EU.

There is uncertainty too over the issue of how much the UK will still be able to bear fruit from acting as an interlocutor between the US and EU. It will be interesting to see whether the UK is able to maintain this role or is side-lined by the US and the EU.

Ahead of Brexit, the UK government outlined an ambitious vision of its future sanctions policy. Speaking about the use of sanctions in human rights abuses, foreign secretary Dominic Raab said that as part of the UKs role as a good global citizen, it would use its sanctions powers against those who targeted journalists, whistle-blowers and human rights campaigners.

It seems unlikely that UK sanctions will operate in isolation from other sanctions regimes since such an independent sanctions policy would be isolationist and unproductive. Arguably, it is self-evident that future UK sanctions regimes will have much greater legitimacy if they are widely implemented by a broad coalition of countries. Such a united approach would obviously have the greatest impact on the intended targets.

The US may see things through a slightly different prism. As with a range of other matters - economic, political and security-related - it may look instead towards France, Germany, or both, rather than the UK, to ensure that its foreign policy is coordinated with that of the European Union. Only time will tell just how Brexit will impact the UKs wider role in world politics, especially as the impact of China and India becomes ever more prevalent.

Kartik Mittal is partner at Zaiwalla & Co

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Brexit: Exercise of soft power by the UK through sanctions - Law Gazette

NewsPoliticsDouglas Ross has insisted the younger generation are already seeing the benefits of Brexit.

Friday, 5th March 2021, 12:09 pm

The Scottish Conservative leader went against comments from his colleague Andrew Bowie, who warned people under 30 will not "reap the benefits" of Brexit.

Asked about them at a Bright Blue event on Friday, Mr Ross admitted he was a reluctant remainer, but that leaving the EU had helped with tariffs and vaccines.

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He said: This generation are already seeing the benefit of Brexit.

The 50,000 people employed directly or indirectly in the Scottish whisky industry are celebrating today because they can see these tariffs being suspended, and young people here in Scotland and right across the UK are seeing the benefits of our vaccination programme, which isnt being replicated in Europe, and that will see our freedoms being returned far quicker.

"We are already seeing the benefits of being an independent country outside the EU.

Earlier this week appearing on BBC Debate Night, Mr Bowie, the West Aberdeenshire and Kincardine MP, had declined to give a timeframe for when the benefits would appear.

He said: We are hoping very much in the near future to allow students from this country to be able to study and enjoy life abroad, but am I going to sit here and say Brexit is perfect and that your generation is going to reap the benefits?

No, Im not, because youre not, frankly, at the minute. And I can see that weve got work to do.

Mr Ross was also challenged on a lack of support for Scotland's fishing communities in this week's UK Budget.

The Moray MP had written to the Chancellor urging an increase to the Brexit fishing fund as part of his eight-point plan, but his pleas fell on deaf ears.

He explained: "I dont just ask for things I know I am going to get.

"Our coastal communities and fishing communities need our support. The Brexit deal did not deliver for them in the way they would have hoped.

There have been added problems in terms of paperwork and bureaucracy that need to be resolved.

"I am pretty sure the Chancellor is looking at how that support is being spent and we might have to come back to this."

The Scottish Conservatives leader also admitted he "deeply regrets" comments he made about gypsy travellers earlier in his career.

Mr Ross was heavily criticised in 2017 when he was asked what his priority would be if he was prime minister for a day.

His answer was "tougher enforcement against gypsy travellers".

Now apologising, he said: I was asked when I was a new MP what would be my number one priority if I was prime minister for a day.

"And there are a multiple of different, better answers than one I gave about a local issue here on enforcement against gypsy travellers that's something that still comes up.

"It was on my Twitter feed the other day.

"I deeply regret my answer to that question and the way it was interpreted.

"I said at the time it was a big local issue and it continues to be a big issue here in Moray every summer. But it's not something I should have answered as being my top priority if I had one day as prime minister."

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Douglas Ross insists younger generation 'already seeing benefits of Brexit' - The Scotsman

The revelation came from Conservative Teesside mayor Ben Houchen after Chancellor Rishi Sunak named his region as the biggest of the eight new freeports in England in last weeks budget. Mr Houchen told the Sunday Express: This is a demonstration of why people in Teesside voted for Brexit. On average across the whole of the region 750,000 people, 67 percent voted to leave the EU.

We could not have had a freeport policy without Brexit. You cannot have proper freeports in the EU.

The announcement is expected in the next few weeks but is the fruition of 8 months of talks but was dependent on the region being allowed to set up a freeport.

It means that around 18,000 new jobs will be created in an area which was badly hit by the closure of the steel works a few weeks ago.

Mr Houchen said: Freeports are a bit wonky and geeky but ultimately what it delivers is absolutely the definition of levelling up.

When it comes to places like Teeside it is absolutely essential to the levelling up agenda because what freeports deliver are real tangible things like factories and processes that people can physically see and touch which wouldnt have been done without a Conservative government and without us delivering Brexit.

Freeports create jobs. The more jobs you have, the more money people have in their pockets, the more opportunities you create.

It also means that instead of suffering a brain drain Teeside will be able to attract the brightest and best in terms of innovative technology such as carbon capture.

The way Rishi Sunak has established the UK freeport policy is that the tax incentives are almost solely around employment incentives and capital cost investment building incentives, Mr Houchen explained.

You look at things like the buildings and structures tax relief, the capital allowances, the abolition of employers national insurance contributions, business rates relief, that is about capital incentives to major businesses to bring large scale manufacturing processes that are often labour intensive into the UK.

This is not about fine art or hoarding bottles of wine, its about real jobs for real people in the regions across the UK.

The new freeport will cover the former steel work site, the port of Hartlepool right the way across up the river to Darlington and Teeside airport.

Another 800 jobs will be created in Teesside with the Treasury relocating part of its department there.

The massive investments were only made possible by Mr Houchens decision to take Teesside airport into public ownership to save it from being redeveloped for housing.

It now has twice daily flights between Heathrow and a London City connection.

Mr Houchen said: Transport connections are essential if you want to start landing things like big government departments and big international private investment.

Are they going to invest in an area which it is difficult for them to connect back from? Of course not but with an airport in the area it makes it easier for them to make that decision.

Mr Sunak travelled to Teesside on Thursday the day after his Budget to hail the progress in the region under its Tory mayor who is up for election this year.

A Treasury source said: Longer term things like freeports are an example of us creating up zones where things are easier and cheaper both on tax cuts and regulation planning which will hopefully drive growth investment and kind of an example of doing regeneration in a Conservative and free enterprise oriented way.

Weve seen you know great excitement about that and areas like Teesside, as the Chancellor saw for himself when he visited on Thursday, have had a complete lift.

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Major EU European manufacturer to relocate to Teeside as result of Brexit and freeports - Daily Express

German exports to the UK plunged by almost a third in January, as the downward trend since Brexit continues to gather pace. A preliminary estimate published this week by the Federal Statistics Office reveals that the UKs divorce from the EU, combined with coronavirus, helped trigger a nearly 30 percent slump in German exports to Britain in the first month of the year. That was nearly double the 15.5 percent decline in 2020, which was the biggest annual drop since the financial crisis in 2009, according to the agency.

The new figures are not the only thing Mrs Merkel has to worry about, though, as a recent survey published by FAZ also reveals German companies spent 2.2 percent less on innovation last year than in 2019.

According to the head of Oxford-based think-tank Euro Intelligence Wolfgang Munchau, this report is significant as spending on innovation is a barometer for future productivity growth.

He explained: "FAZ says one of the factors is Brexit, which has added to the uncertainties of the pandemic. Another factor which is not reflected in the data is a reduced efficiency of the investments.

"Our suspicion is that the growing gap in digital infrastructure is a factor.

"What the ZEW data show is that large companies kept investing. Virtually all of the decline is due to small and medium sized companies, where investments in innovation fell by nine percent."

Mr Munchau noted the rise in innovation investments from 2.4 percent of GDP in 2005 to 3.1 percent in 2019 was one of the engines behind Germany's strong economic performance.

However, one-third of that was due to the car industry alone another indicator of Germany's vulnerability to that one sector.

He concluded: "Another problem is the lack of digital investments. Germany's tendency to double down on analogue technologies, like diesel cars, and the failure to invest in digital technologies is showing through in the data.

"Just as it took a long time for the misallocation to affect investments and productivity growth, it will take a long time for catch-up investments in digital technologies to reverse.

"What we expect to see in Germany is a period of relative economic decline ahead - relative to the world, but also relative to other countries in the eurozone."

The survey and the trade slump might have raised alarm bells in the EU, as according to German MEP Gunnar Beck the bloc will start crumbling when German money runs out.

He told Express.co.uk: "EU leaders absolutely want European integration... why?

"It's a mystery to me because, so far, they haven't been successful.

"The European Community was relatively successful but things started going down the drain with the single currency and so on.

"The economic performance of the last 25 years has been abysmal."

JUST IN:Barclays urges City of London to focus on US and Asia instead of EU

"This whole idea of Merkel's austerity is very unconvincing.

"She is the most expensive Chancellor in German history."

He added: "She is obviously paying German money left, right and centre.

"What is happening now is that the whole of Europe is becoming dependent on Germany and to a less extent Northern European money.

"Southern Europe appears to stand no chance at regaining competitiveness.

"It is not a very healthy state of affairs."

At the end of July, EU leaders struck a deal on a huge coronavirus recovery package after days of bitter talks.

The 750billion (668billion) coronavirus fund, spearheaded by France and Germany, will be used as loans and grants to the countries hit hardest by the virus.

The remaining money represents the EU budget for the next seven years.

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EU tipped for catastrophic breakup as Brexit hits German exports to UK - Daily Express

An immigration crisis is facing Britain now that Brexit reality is hitting

I read Ian Dunts column on EU citizensand I agree that there is cause for concern, because since the pandemic the issue appears to have gone under the radar, with little ongoing publicity about the fact that the finishing line to gain full or pre-settled status is June.

Surely there will not be a dire repetition of the Windrush scandal, when men and women were hounded for their perceived lack of status? This is a minefield and an immigration crisis waiting to happen.

Politicians of all parties need to take this up urgently or there will be a catastrophe and yet another hostile environment mark 2, and our EU citizens who have benefitted this country enormously, many as key workers in the NHS and in the front line of this pandemic, may find themselves referred to on the side of iniquitous and deplorable vans.Judith A. Daniels, Great Yarmouth

According to James Ball Im one of those sad saps who threw away good money on the useless cause of trying to hold Matt Hancock to his legal responsibilities by supporting the Good Law Project.

With the governments majority as unassailable as it is, a largely right wing press that frankly doesnt give a damn, the courts are the only and realistic hope for speaking truth unto power. The article was no more than a counsel of despair, even ending with the writers hollow call, Surely its time for a change of tactics.

A fine invitation for which he never even attempted a proposal.

In the words of the Jack Nicholson character in One Flew Over the Cuckoos Nest as he is carted off for treatment for resisting the system: At least I tried dammit, Chief. I tried. That message got through and spurred the Chief on to his own successful challenge.Stephen Hanvey, Winchester

Have your say by emailing theneweuropean@archant.co.uk. Our deadline for letters is Tuesday at 9am for inclusion in Thursdays edition. Please be concise - letters over five paragraphs long may be edited before printing.

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Windrush 2 is looming as Brexit reality bites - The New European

On December 24, 2020, the United Kingdom and the European Union concluded one of the largest trade deals in history, the EU-UK Trade and Cooperation Agreement (TCA). While the TCA regulates a number of important areas, it does not address in detail significant aspects of the UK economy, including the services sector, which represents the largest portion of the UK GDP. In this publication, we discuss key areas of the TCA of relevance to our clients, identify important issues that remain largely unregulated and examine other topics of note.

ESG Rules: Will the UK Align With the EU?As ESG regulation comes into force in Europe, financial services businesses operating in the UK and the EEA face the prospect of multiple layers of ESG-related regulatory compliance. In this article, we explore the potential challenges such businesses face.

Remuneration and Incentive Arrangements Under UK LawUK employee and executive share plan and remuneration arrangements engage a number of different EU laws and regulations. Although some areas of uncertainty remain, the UKs replication under UK law of many of the relevant rules has meant that administration of remuneration and incentive arrangements will continue largely unaffected, at least for now.

Recognition of Restructuring and Insolvency ProceedingsThe TCA did not include language on cross-border cooperation and recognition regarding insolvency proceedings. As a result, debtors with a presence both in the UK and the EU face a challenging patchwork of different rules and regulations.

Navigable Challenges for Private FundsAlthough the financial services industry was omitted from the terms of the TCA that outlined cooperation between the UK and the EEA, the private fund community has created a number of structures in recent years that should be helpful as it navigates the current uncertainty. Well-advised managers should be able to maintain the UKs standing as a leading asset management jurisdiction.

Offsetting the Loss of Passporting Rights in Financial Services RegulationThe TCA does not provide a comprehensive free trade arrangement for financial services between the EU and the UK. UK firms which previously enjoyed unhindered access to the EU market under the passport must now establish a licensed entity in the EU or augment the use of an existing EU-based entity.

Impact on the Fintech SectorThe TCA sets out some obligations for parties to establish arrangements governing trade in digital services, but it does not offer substantive provisions to offset the fact that the UK no longer benefits from being part of the EU single market for financial services. EU and UK fintech firms must now grapple with two regulatory regimes where they previously relied on the EU-wide passport to provide cross border services.

Reaching a Consensus on (Re)insuranceWithout clarity from the TCA on financial services, including (re)insurance, a UK participant may now access new EU business only via an EU-authorised subsidiary/branch or, in limited circumstances, on a cross-border basis that is subject to the requirements of the relevant EU member state.

Level Playing Field Obligations: Insurance Policy or Tinderbox for Future Trade Disputes?The TCA's level playing field provisions are among the most politically charged in the agreement. Requiring the parties to maintain current and future standards in nontrade-related policy areas, the provisions have the potential to be a source of disruption for future trade disputes if deployed. How realistic the application of this contentious provision is likely to be in practice, and the extent to which it creates challenges for both the EU and the UK, remains to be seen.

A Temporary Solution for Data Protection and Digital TradeBrexit has raised many questions regarding the future of data protection and digital trade. The TCA reaches a positive, pro-business position on data protection and digital trade that should be welcomed by organisations navigating the new relationship between the UK and EU in these important areas.

Plus a Change ... Reframing the Tax Influences of the European UnionThough the UK and the EU have separated, the TCA provided a very long rulebook on how to co-exist. In addition to new tax policy enshrined within the TCA, some EU-derived tax rules set prior to Brexit will still need to be observed.

The Future of Employment Rights and Worker MobilityFollowing the implementation of the TCA, companies must keep in mind the agreement's provisions relating to worker mobility, limitations on travel to perform services and recognition of professional qualifications in both the EU and UK. The potential for future changes to EU-derived employment rights in the UK is also subject to level playing field requirements.

EU-UK Antitrust Enforcement and CooperationThe UKs new relationship with the EU under the TCA brings material changes to the EUs and the UKs antitrust regimes. For mergers and anticompetitive practices, the two regimes will apply in parallel. More far-reaching is the new UK subsidy control regime that seeks to prevent EU-UK trade-distorting subsidies, and the potential for either the UK or the EU to impose stricter standards on the other under a controversial level playing field provision.

Civil Disputes: New Gaps, Old SolutionsThe application within the UK of EU rules on jurisdiction and enforcement, including the Brussels and Lugano regimes, ended when the UK completed its formal separation from the EU. Litigants and drafters of commercial contracts must instead look elsewhere for now, to the 2005 Hague Convention and English common law for the rules on choice of jurisdiction and enforcement of judgments.

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Insights Special Edition: Trade and Cooperation The Final Phase of Brexit - JD Supra

LONDON The shift in financial staff and assets from the City of London to the European Union because of Brexit has eased after Britain completed its full departure from the bloc, a tracker from consultants EY showed on Tuesday.

Financial services are not included in the EU-UK trade deal that came into effect on Jan. 1, largely cutting off the City from the EU.

Financial firms in Britain have opened subsidiaries in the EU, with Dublin and Luxembourg the most popular destinations, EY said.

After the major hurdle of standing up new EU hubs, the days of significant swathes of asset and job relocation announcements appear to have passed and will likely be replaced by the slower yet ongoing movement of people and assets to Europe for compliance purposes, Omar Ali, a financial services managing partner at EY, said.

EY said in its latest Brexit Tracker that job moves have risen to almost 7,600, up by 100 since October, while the number of new hires in Europe since Britains EU referendum in 2016 remains flat at around 2,850 new jobs.

The loss is a small fraction of total jobs in British financial services and is far lower than initial predictions.

There was also an incremental rise in the relocation of assets, now totalling almost 1.3 trillion pounds ($1.82 trillion), up from 1.2 trillion pounds previously, EY said.

On Jan. 4, more than 8 billion euros ($9.63 billion) in daily share trading shifted from London to Amsterdam and Paris, followed by chunks of trading in euro-denominated swaps.

The EU is targeting the clearing of euro swaps, which London dominates, although EUs Ali said splitting markets would not benefit Europe.

Fragmentation of European financial services will serve to only benefit the U.S. and Asia, he said. Some of the swaps trading that has left London has moved to New York.

EY calculated its figures from public statements by 222 of the largest banks, insurers, fintechs and asset managers since June 2016 to the end of February 2021. A quarter, or 57 firms, said Brexit has or will have a negative impact on them, up from 49 in January 2020.

($1 = 0.7162 pounds) ($1 = 0.8306 euros) (Reporting by Huw Jones; editing by Barbara Lewis)

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Post-Brexit Exodus of Staff and Assets from London to EU Slows - Insurance Journal

This fireside chat recap is from Day 6 of FreightWaves Global Supply Chain Week. Day 6 focused on global maritime logistics.

FIRESIDE CHAT TOPIC: How Brexit will influence trade across Europe

DETAILS: While the U.K. has already left the European Union, there are a number of questions that remain about trade flow, customs regulations and relationships between Britain and the EU.

SPEAKER: Walter Van der Meiren, director for customs brokerage at UPS Europe.

BIO: Van der Meiren has over 35 years of experience dealing with customs trade between countries. He is part of the European Express Association and the Customs Taskforce of Business Europe and serves as chairman of the Customs and Trade Facilitation Committee at Amcham EU and vice chair of its Brexit task force. Since Jan. 18, Van der Meiren has served as chairperson of the Trade Facilitation Committee of the European Express Industry.

KEY QUOTES FROM VAN DER MEIREN: The U.K. left the club and if you leave the club the rules dont apply to you anymore. But if you are still doing business with the club, you have to come up with new rules. In order to prepare ourselves for this, UPS from the first day after the referendum started looking at different things that looked at all aspects of new logistics.

One of the most challenging items was the unpredictability of deployment date and also not knowing what the requirements would be.

In my 36 years Ive seen customs change dramatically in terms of legislation, in terms of technology, in terms of taxes, because customs is traditionally a revenue collector. What people need to understand is that customs has grown into a pretty important actor in terms of safety, security and anti-terrorism but also in protecting citizens in checking goods and that adds to the complexity that we now have facing Brexit.

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GSCW chat recap: Customs and trade in post-Brexit world - FreightWaves

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