+44 (0)20 7799 6677

Leave Argument: Leaving the EU would mean the majority of British companies would not have to comply with EU rules and regulations

According to a 2015 YouGov poll, voters are concerned that outside the EU Britain would have to follow the same rules to trade with Europe. It is true that a British company exporting to the EU must comply with the EU’s rules and regulations. It is also true that if Britain left the EU, an EU company exporting to Britain would have to comply with British laws and regulations. However the nature of EU regulation means there would be other changes.

The benefits of being outside
In a 2014 report, Business for Britain showed that 95% of British companies do not export to the EU’s single market. However these companies, including large public sector organisations like the NHS, still have to comply with EU regulations. This includes UK companies who export solely to non-EU countries. Some businesses are allowed to opt out of some EU requirements but beyond a few limited exemptions, EU regulations and directives are universally applied to all British businesses. If we left the EU, British companies exporting to Europe would still need to follow EU rules and regulations. However the 95% of companies that do not export to the EU would not necessarily have to. Because these regulations depend on being part of the single market, it would depend on the deal struck by the EU and UK after Brexit.

There would be many benefits for UK companies that do not export to the EU if the power to set regulations and rules were bought back to the UK. According to the Business for Britain report, a large majority of UK firms that do not export to the EU found the costs of single market regulation outweighed the benefits. The main problem is the volume of EU regulation. In 2010 Open Europe showed that regulation had cost the UK economy £176 billion since 1998, of which £124 billion (71%) had its origin in EU legislation. This quantity of regulation, which can hit small businesses and start-ups particularly hard, creates bigger compliance and administration costs.

A growing amount of EU regulation that is applied to organisations that do not export to the EU has no relevance to the single market or trade. EU social law, which has an impact on employment law, social security, rights legislation, and health and safety rules, costs UK business and the public sector £8.6 billion a year. Some of these regulations have made UK businesses that do not export to the EU less competitive. For example, written risk assessments and working time rules can make it more difficult for UK companies to employ workers or for an individual to start a business. Open Europe showed that EU social law can also hurt public sector organisations like the NHS, which has been severely affected by the Working Time Directive.
According to Open Europe, because agreement is not needed at the EU level, British regulations and rules would be easier to change and control. It would also be easier to create regulations and rules that fulfil British needs. Current EU rules and regulations have to take other member states into account. As a member of the EU, the UK can try and influence the rules and regulations of the EU, however the UK’s influence has been declining.

On some occasions being a member of the EU will not allow the UK to influence EU rules and regulations. For example when the UK is trading with the EU, it is not necessarily EU regulations the UK is adhering to. Instead, both the UK and EU are adhering to international standards. Because markets are becoming more globalised, the EU often enacts regulations or rules that have been set by international organisations. These organisations usually bring together officials and representatives from around the world to suggest improvements and design regulations, standards and laws. Regulations and standards are set internationally by bodies like the International Electrotechnical Commission, the International Standards Organisation, and UN organisations. These are usually adopted by nations signed up to the organisation and become law.

Outside of the EU the UK could have its own representatives at these negotiations. The EU, when it takes part in negotiations, tries to put forward suggestions that are beneficial for EU member states. Due to the different trading priorities of EU members, the EU may represent views that do not reflect the interests of the UK. If Britain left the EU, it would be possible for the UK to have its own representative at these negotiations. Instead of implementing rules passed down by the EU, the UK would be able to adopt regulations it had agreed to and had influenced directly.

  • Christian Stensrud