News British businesses want to retain EU legislation after Brexit, study finds

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Most British companies want to retain current EU rules – including those governing employment law – after Brexit, a study from the Confederation of British Industry (CBI) has found.

Of 23 business sectors in the UK, 18 favour retaining EU rules, the CBI has found, highlighting their desire to converge or align with the majority of EU regulations after Britain leaves the EU.

Around 19,000 pieces of EU legislation are currently in force, covering every sector of the UK economy, leading to warnings from experts that even small changes to the regulatory framework could have hugely detrimental knock-on consequences to the British economy.

Even where there are certain advantages in diverging from EU regulations, the report said “these changes are minor overall and the benefits of changes are outweighed by the costs of losing access to the EU market”.

Carolyn Fairbairn, CBI director general, yesterday (11 April) warned that deviation from rules in one sector would have a knock-on effect on businesses in others, while divergence in one part of a production process would bring consequences for market access throughout entire supply chains.

“Put simply, for the majority of businesses, diverging from EU rules and regulations will make them less globally competitive, and so should only be done where the evidence is clear that the benefits outweigh the costs,” she said.

Beyond assessing the impact on different sectors, the CBI report considered rules that touch all businesses, and suggested how these wider regulations should be approached.

A key priority is employment law, where there was no appetite for deregulation among businesses.

Some were concerned about what changes to these laws might be made in future once Britain leaves the EU, as it will no longer be able to influence EU decisions. “UK employment laws being made without UK influence would be unacceptable,” the report stated.

“Businesses are not seeking changes to EU-derived employment legislation after Brexit, but are instead primarily concerned about the changes to regulations that might be made in the future.

“UK influence has previously changed EU rules that when initially drafted would have been a bad fit for the UK’s labour market. The UK must be able to continue to do this, or to diverge over time on this issue.”

Paul McFarlane, partner at Weightmans, said this proposal was laudable, although it may not be accepted by the government’s ‘three basket’ approach – looking at different sectors of the economy and taking a view as to whether it continues using the EU rules, retains the same objectives but goes about achieving them in a different way, or does things completely differently.

“In practice, I don’t see how what the CBI is proposing can work,” said McFarlane. “They seem to be saying the UK should have influence over how EU laws are changed going forward, and that seems to be the opposite to what Brexit is about.”

Despite these warnings, Mike Cherry, national chairman at the Federation of Small Businesses, claimed that “the UK has a golden opportunity to forge its own path in creating a more small business-friendly regulatory environment that can drive growth and productivity”, and said “the UK government must carry out a holistic review identifying how the UK’s regulatory framework could be reformed to promote small business competitiveness”.

Rachel Suff, senior employment relations adviser at the CIPD, suggested that leaving the EU “should be viewed as an opportunity to enhance the quality of some aspects of EU-derived employment law, as well as consulting on reforms to improve the implementation of certain laws in practice.

“Both these aims can be achieved without undermining the level of protection these laws afford to people at work.”

The mobility of employees was a further key priority highlighted in the report. Employers said they hoped an open approach to movement was retained, while a reciprocal agreement was requirement for inter-company transfers.

A recent investigation by the Migration Advisory Committee found that employers wanted to preserve access to talent from across the EU.

In negotiations over the next few months, the CBI called on the government to work closely with businesses to understand their experience and deliver a deal that works for the UK and the EU.

“The evidence is increasingly clear that, while there are absolutely opportunities to improve rules and processes as the UK leaves the EU, for the majority of businesses diverging from EU rules and regulations will make them less globally competitive, impacting on those jobs, wages and living standards that should be at the heart of this process,” concluded the report.

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