Has the UK diverged too far from EU standards?

Many Brexiters hoped to cement the UK’s departure from the EU through rapid deregulation, creating a ‘Singapore-on-Thames’ low-tax, low-rules economy. However, their plan did not happen, for two main reasons: the ‘level playing field’ provisions of the Brexit deal, and fierce public resistance to any reduction of standards on issues such as the environment, food and animal welfare.

The ‘level playing field’ is a set of provisions in the Brexit trade deal (the Trade and Cooperation Agreement) which require that both the UK and the EU “do not weaken or reduce their levels of social, labour and environmental protection below those in place at the end of 2020”. In practice, since it was the UK that had plans to deregulate, this restricted its ability to do so.

(The level playing field provisions do not ban divergence on these regulations as such, but make it subject to ‘rebalancing’ measures. These would see the UK lose some of its favourable trade terms if the level playing field is breached.)

Much to the Brexiters’ frustration, there has in fact been very little divergence from EU law. UK in a Changing Europe, which publishes a quarterly ‘UK-EU Divergence Tracker’, found just five cases of ‘active divergence’ (“where the UK, or some part of it, changes its rules”) in the first quarter of 2024, alongside three instances of ‘active alignment’, where the UK takes steps to align with new EU rules.

Joël Reland, who produces the divergence tracker, was asked how far the UK has diverged from the EU. He replied: “The very short answer is: not very... There’s been big plans to review where we might be able to change EU regulation. For example, there was a 108-page document called ’The Benefits of Brexit’ which came out in 2022, listing myriad ways we could change everything from financial services to state aid to procurement to gene editing… but relatively little of it has actually come to fruition.”

To give an idea of the level of divergence currently taking place, the five identified instances of divergence for the first three months of 2024 include such issues as banks being allowed to make a small delay to transactions when they suspect fraud and the removal of a tax relief for touring orchestras.

The greater issue has been what the report calls ‘passive divergence’, with 15 cases identified in this period. This is where the EU changes its rules and the UK, since it is no longer a member, does not implement the changes. This form of divergence is more likely to accumulate over time, and has been noticed especially on environmental issues.

This situation does not present a block on rejoining the EU, however. Instead, it would be necessary to re-align and ‘catch up’ on such missed changes as part of the accession process. The less time passes before the UK rejoins, the faster this process can be.

It is also worth noting that one part of the UK, Northern Ireland, continues to implement all of the EU’s new rules as part of the ‘dynamic alignment’ included in the Northern Ireland Protocol – that is, unless the Northern Ireland Assembly, in the “most exceptional circumstances”, votes to object to a change via the Windsor Framework’s ‘Stormont brake’. This complicated balance acts in practice as a further UK-wide limit on divergence.

Retained EU law

Large parts of the law that remains on Brexit Britain’s statute book originate in EU law. This is only to be expected after almost half a century of membership: entire UK industries’ regulation regimes are entirely based on EU standards.

The European Union (Withdrawal) Act 2018 created the concept of ‘retained EU law’, which allowed for a ‘snapshot’ of EU law to be taken on the date of Brexit and continue to apply in UK law.

In 2022, the government attempted a “bonfire” of these 4,000 retained EU laws, which would have seen them all automatically ‘deleted’ at the end of 2023. This raised concerns from business groups who did not want either divergence from EU law, with the effect that would have on exports, or the sudden disappearance of their entire domestic regulatory framework. The British Chambers of Commerce called the plan a “hasty sunset clause across vast areas of UK regulation”. Campaigners, charities and trade unions were opposed to the possible repeal of workers’ rights as well as environmental and animal protections. The Royal Society for the Protection of Birds (RSPB) said the government had “effectively launched a full-on attack on the laws that protect nature.”

Under this much pressure on multiple fronts, with major organisations launching high-profile campaigns against the bill, the government backed down. Instead, only a selective list of laws was repealed.

This may sound technical, but it is critically important for the issue of divergence. The “bonfire” would have massively increased UK divergence from EU regulations. With the plan defeated, and little prospect of it returning in future, our current low level of divergence looks set to endure. This, in turn, makes rejoining the EU an easier and faster process.

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