London Businesses Are Finally Beating The Brexit Slump, But Is Regulation The Next Bump?

In early July, London and indeed British businesses finally saw a recovery from the Brexit slump. Reuters reported a export boost from the UK to the EU at a level not seen since October 2019, a huge win for the economy. However, even with a deal in place, question marks hang over several areas of industry and the businesses within them. According to some analysts, regulation and compliance will create the next bump in the road.
Existing impacts of regulation
Regulatory controls have already had a distinct impact on British businesses, and particularly those within the financial services sector. The Markets in Financial Instruments Directive MiFID II was the systematic internaliser Brexit needed in order to achieve trading parity with financial operations within the EU bloc, but it brought with it £2.5bn of compliance costs for firms across the capital and further beyond. What’s more, new controls will create £1.6bn of new costs according to TechCrunch.
Adequate protection
The EU has a process by which they assess the data protection qualities of partner states or trading partners. The certificate of this quality, an ‘adequacy decision’ enables all businesses within the designated state to trade with the EU without the need for additional controls. According to analysts including New Economics, there is no guarantee that the UK will meet this level. Getting past this will require a business-by-business assessment of privacy regulations and data policies that will soon create huge fees.
The outlook
As the Independent outlines, these regulatory breaks are hitting British businesses in industries ranging from security to car manufacturing. Fines and fees across all areas of logistics and at every stage of the supply chain have contributed to this scenario. This means that British businesses, while exporting goods, are feeling the pressure of fines and extra regulations across their business operations. Tackling this in a constructive manner requires work from the government and from businesses, to form new networks and ensure that goods can once again be exchanged freely between the UK and the EU.
Hopefully, the next round of compliance and regulatory measures will be constructive. Building proper trade between the EU and the UK will require a return to the frictionless interface created by British membership of the EU. Only continuing that trend will be beneficial for businesses.