UK businesses are feeling the pain of post-Brexit rules

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At the height of the 2016 Brexit referendum campaign, businesses were promised that leaving the EU could yield a regulatory dividend worth more than £12bn a year, if the UK government boldly used his regained freedom.

And although the business community is overwhelmingly in favor of staying in the EU, it welcomed the prospect of lighter regulations when Britons voted to leave. The Institute of Administrators found that 60% of its members wanted to reduce the volume of “unnecessary bureaucracy” in Brussels.

Just over a year after the UK’s legal exit from the EU’s single market on January 1, 2021, leading UK business organizations are reporting that members are tired and frustrated with the lived experience of Brexit.

Smaller businesses with less time, money and staff to absorb the costs of regulatory requirements – which hoped to make the most of post-Brexit deregulation – found it harder to adapt to customs rules and regulations. which apply when trading with the EU as a “third country”.

Mike Cherry, President of the Federation of Small Businesses (FSB) says: “Small businesses have been promised that one of the benefits of leaving the EU will be less red tape. They live in hope of being delivered.

The British Chambers of Commerce were equally scathing. In one report to mark the end of the first year of implementation of the EU-UK trade and cooperation agreement, the BCC found that nearly half of all members surveyed had found it difficult to trade with the EU.

Difficulties include EU bureaucracy and new UK regulatory requirements – such as the UKCA quality control mark and the creation of a “UK Reach” chemical safety database – which duplicate EU rules. EU without obvious commercial gain.

These systems grew out of the UK’s decision to prioritize full legal separation from Brussels and the EU’s determination — explicitly stated by Michel Barnier — that the UK should lose its position as the ‘regulatory and certification hub’ for the EU single market.

The chemicals industry has estimated that creating a UK version of the EU Reach (Registration, Evaluation, Authorization and Restriction of Chemicals) regulatory mechanism would cost £1 billion. The sector has been fighting since the end of the Brexit transition period to get the UK government to reduce the charges for enrolling in the scheme. The talks are continuing.

In a concession in December, however, the government extended the UK Reach registration deadline to 2025 and offered to explore “a new model” to “reduce the need to replicate EU Reach data packages”. – a key industry demand – from February.

The industry is reluctant to raise expectations. But Stephen Elliott, chief executive of the Chemical Industries Association, said the aim was “effective regulations and standards that have delivered better results for Britain’s growth, net zero and upgrade agenda”.

For UK manufacturers – many of whom operate as intermediaries in complex supply chains that go back and forth across Europe – the biggest Brexit bug was the government’s decision to create a copycat version of the quality standard and EU “CE” safety mark.

Again, the compliance deadline has been pushed back – by a year to January 1, 2023 – following intense lobbying by organizations such as the BCC and builder lobby Make UK. The industry, however, continues to complain about the burden.

At least for now, the UKCA mark follows the same underlying standards as the EU CE mark, meaning it requires companies wishing to place goods on the UK market to duplicate their registrations in the EU. EU.

This may simply mean filling out a form. However, for hazardous or complex industrial and electrical products – ranging from lift parts to construction adhesives – companies must have their products assessed by UK “notified bodies”. But these organizations, complain the companies, do not have the capacity to meet the demand.

In November, the Construction Leadership Council wrote to UK Business Secretary Kwasi Kwarteng raising ‘urgent industry concern’ about a system it warned could lead to shortages of key construction products and undermine the government’s upgrading program.

In the October 2021 BCC International Trade Survey, nearly two-thirds of respondents for whom certification marking was applicable said they would prefer to revert to the EU CE certification marking system.

Fergus McReynolds, director of European and international affairs at Make UK, said that while it welcomed the extra year to breathe, the UKCA brand was creating barriers to trade with little or no benefit when UK industrial standards and underlying European markets were unlikely to diverge.

“Creating parallel regulatory environments only creates additional bureaucracy and costs which can harm the competitiveness of UK businesses in international markets,” he adds.

Getting the UK and the BCC to want the government to pursue ‘mutual recognition agreements’ with the EU and create a forum in which UK business organizations can jointly consider how the UK should respond to future changes in EU legislation.

If the UK does not reflect EU changes, industry fears this will lead to further ‘passive’ divergence from EU standards over time and therefore further regulatory burdens for UK exporters.

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Some companies are harboring hopes that, at least domestically, some of the dividend promised by Brexit can be realized. It wouldn’t come from ‘reducing bureaucracy’ – or expensive UK copycats of EU regulations that businesses must comply with anyway to sell to the EU’s 450 million consumers. Instead, it would be by a lighter touch at home.

The government’s proposals in January Benefits of Brexit The document promised an approach to national regulation in which authorities “work together with businesses to ensure that there is a clear feedback loop between regulatees and regulators”.

The FSB’s Cherry believes a better future is possible and cites the Canadian province of British Columbia, where, he says, the removal of unnecessary regulation has led to significant economic growth and productivity gains.

“This model could be implemented in the UK,” he says, “if we can embrace a culture where regulation is not the default response to political issues.”

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