As powers are transferred from the EU back to the UK, there is potential for divergence. One example pertaining to construction can be found in the recently released UK Internal Market White Paper (P34).
Economic modelling of divergence in regulation in the construction sector shows that while individual regulatory differences create only small increases in the costs of trading with the different parts of the UK, in a realistic scenario of several small policy differences, new barriers could create the equivalent of a tariff of 3%, while a moderately more impactful scenario of policy divergence in the construction sector could lead to a cumulative tariff equivalent of over 8%
To mitigate this and ensure there is continuity across affected areas, the White Paper sets out two principles for the UK’s approach:
- The principle of mutual recognition – regulations from one part of the UK will be recognised across the country to ensure the devolved administrations can set their own rules and standards, but still welcome the trade of businesses based anywhere in the UK
- The principle of non-discrimination – so there is a level playing field for companies trading in the UK, regardless of where in the UK the business is based.
The Government is consulting on the options set out in the white paper.
Responses must be submitted by 13 August 2020.