A WARNING has been given that the gap between UK and EU standards is likely to grow, leading to even more difficulties for trade, with possible bans on some UK exports.
The food and drink and creative industries along with health care are predicted to be amongst the hardest hit, according to new research.
The report by Brussels-based strategic consulting firm Low Associates states that businesses in the UK are still getting to grips with the realities of the UK’s new “third country” status.
The Mind The Gap report also points to the “lack of trust” apparent between UK and EU political negotiators and suggests industries should co-operate at a “level down” from officials and ministers.
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Former Tory Cabinet minister Andrew Lansley, who now works for Low, said businesses both in the EU and the UK need to be “the honest broker” in trying to secure greater alignment in the future because of the mistrust created by Brexit.
“We in Britain do not want to be in a position where we are torn between US standards and EU standards,” Lansley said.
The report warns that friction between the EU and the UK is set to increase next year as full border controls come into force, with the divergence in sanitary and phytosanitary standards even leading to import bans on UK exports.
“The prospect of increased divergence between UK and EU regulations will impact on supply chains and manufacturing costs,” the report adds.
“Mutual recognition (or lack of it) will impact on manufacturing and services significantly if it is not achieved. The ‘gap’ therefore is set to widen.
“This will be anomalous in a world in which trade agreements are looking to align regulatory environments, create open digital markets, and adopt shared environmental, labour market and animal welfare standards.
“For British business, this is not an insignificant risk. The EU is the UK’s largest and closest market.”
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The report predicts that “exceptionally large increases” in UK trade volumes in other markets will be needed to offset the possible loss of market share in the EU. It also points out that post-Covid issues in global supply chains are leading to onshoring of industry within the EU, which will not include the UK.
“The experience of those engaged in EU-UK trade is already that it entails additional cost and complexity,” the report states.
“Managing this will be more achievable if the relationship quickly becomes stable. But, for the moment, it isn’t stable and there are continuing signs that the divergences between EU and UK standards, regulations and policies will increase over time. There is no policy impetus towards alignment. The gap has opened up between the EU single market and the UK internal market. UK businesses and others need to ‘mind the gap’.”
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