Brexit at 10: Regulation

The Trade and Cooperation Agreement was designed to maximise regulatory autonomy – for Great Britain at least – by taking the UK firmly outside the orbit of the EU’s single market. And there has since been welcome innovation in UK regulation, which is being driven by individual regulators, regulatory networks, the Regulatory Innovation Office and government departments. ²⁶ Gill M, Regulation and growth: Will the government’s strategy deliver?, Institute for Government, 2025, www.instituteforgovernment.org.uk/publication/regulatory-action-plan

But much of this aims to resolve inefficiencies in the UK’s national regulatory arrangements, rather than to diverge from the EU (or lead the world). Regulation has been front and centre of implementing Brexit, but not in the way its proponents might have hoped.

Only modest divergence from EU regulation has been achieved

Five years ago, the IfG said it would be hard for the UK to realise the promised regulatory benefits of Brexit, ³² Rutter J and Marshal J, Taking back control of regulation: Managing divergence from EU rules, Institute for Government, 2021, www.instituteforgovernment.org.uk/publication/report/taking-back-control-regulation  and so it has proved. Early enthusiasm for ‘sunsetting’ laws that were initially transferred onto the statute book to smooth the transition from the EU – as discussed by Jonathan Jones in this series – was quickly frustrated by business concerns about regulatory uncertainty and, in the case of GB businesses exporting to the EU, the cost and complexity of satisfying two regimes.

The UK’s attempts to go it alone have sometimes proved unworkable and had to be quietly abandoned (for example UKCA marking, which was to replace the EU’s CE marking for product safety, will now remain an optional alternative indefinitely). ³³ Department for Business and Trade and Kevin Hollinrake MP, UK Government announces extension of CE mark recognition for businesses, GOV.UK, 1 August 2023, www.gov.uk/government/news/uk-government-announces-extension-of-ce-mark-recognition-for-businesses  And even where the UK has offered clearly less burdensome standards, businesses have often chosen to adhere to EU rules anyway (for example when the EU developed stricter rules than the UK on the arsenic content of baby food, UK manufacturers still chose to adhere to EU rules to ensure products could be sold across borders). ³⁴ BBC News, Windsor Framework: Baby food firms to follow new EU arsenic rules, 13 March 2023, www.bbc.co.uk/news/uk-northern-ireland-64945938

UK in a Changing Europe found that by July 2024 there had been “only a handful of substantive reforms – on the export of live animals, freeports and the repeal of the bankers’ bonus cap”. ³⁵ Reland J, Regulating after Brexit, UK in a Changing Europe, 2025, https://ukandeu.ac.uk/reports/regulating-after-brexit/, pp. 6-7, 17  More recently, it found that while the UK is deliberately diverging in financial services, for example, most divergence now occurs not because the UK wants it, but because the EU is changing its own rulebook and the UK is not keeping up. ³⁶ UK in a Changing Europe, UK-EU alignment and divergence: the road ahead, 24 February 2026, https://ukandeu.ac.uk/reports/uk-eu-alignment-and-divergence-the-road-ahead/

The UK now has less influence over both EU and third country rules

Brexit has left the UK with no direct influence over EU regulation. UK representatives no longer sit on EU working groups, and no EU agencies are based here.

While the UK is a sufficiently large market to diverge from the rest of the world in a few key sectors, particularly some aspects of finance and technology, in others it has become a de facto rule-taker. Given the scale and interconnectedness of global industries, many regulations are international in nature and the UK finds itself squeezed between the EU, the US and China.

Meanwhile, the UK is coming under pressure to retreat from EU rules it wants to keep – for example, with repeated reports that US trade negotiators want the UK to reduce EU-inherited animal welfare standards to open UK markets to their exports. ³⁸ Loth S, Chlorine-washed chicken vs chlorine-washed salad leaves: what's the difference?. Which?, 15 September 2020, www.which.co.uk/news/article/chlorine-washed-chicken-vs-chlorine-washed-salad-leaves-whats-the-difference-aMipZ5W3EtGW

Four questions the UK government must answer in the years ahead

From the UK’s current position, on the eve of the 10th anniversary of the decision to leave the EU, ministers should focus pragmatically on four questions.

1. How to retain regulatory credibility outside the EU?

Ministers have yet to learn to resist the populist impulses that can harm the UK’s appeal as a market. An early example was the Conservative government’s decision to overrule the first finding of its new, independent, Trade Remedies Authority – and then to reduce its powers. ⁴⁴ Gill M and Bishop M, How to set up a public body, Institute for Government, 2024, www.instituteforgovernment.org.uk/publication/how-to-set-up-a-public-body, p. 19

The UK needs to maintain confidence in the consistency and fairness of its competition regime, and in the predictability and stability of its utilities regulation, for example, if it is to maintain the economic activity and inward investment it needs. ⁴⁵ Haile D and Chivukula S, Investing in water and energy: What is government’s role in delivering infrastructure?, Institute for Government, 2025, www.instituteforgovernment.org.uk/publication/utilities-regulation  The EU is no longer there to act as a brake.

2. How and where to exert meaningful global influence?

The UK had ambitions after Brexit to be a regulatory innovator the world would follow. But even in AI regulation – a political priority where the UK has so far diverged markedly from other countries – it has had to recognise that its capacity to exercise global leadership is limited. Rishi Sunak’s 2023 AI summit, at which the UK convened and catalysed global thinking about emerging issues, so far seems to have been a high watermark of the UK’s global influence in this field. ⁴⁶ Gill M, Rishi Sunak’s AI summit gamble paid off, Institute for Government, 2023, www.instituteforgovernment.org.uk/comment/rishi-sunaks-ai-summit-gamble-paid

Exercising effective global leadership will require the UK to develop deeper capability in regulatory diplomacy, and to practise it in a sustained way. AI will be a test case of how far regulatory nous can substitute for market power in underpinning such diplomacy.

3. How to act as a global sandbox without taking on undue risk?

The UK’s greater freedom to set its own rules after Brexit has created the opportunity to move faster and develop more creative regulatory regimes, particularly in areas of comparative advantage like financial technology and life sciences. Firms may be attracted to the UK by the responsiveness of its regulation in these areas which can, for example, enable new markets to build trust. But responsiveness should not imply a race to the bottom, attracting rogue operators.

The UK may be tempted to take more risk to achieve short-term growth. This temptation is most transparent in financial services, where prudential regulation and growth are often (wrongly) seen to be in direct tension. ⁴⁷ National Institute of Economic and Social Research, Is Financial Regulation Holding Back Growth?, 16 January 2026, https://niesr.ac.uk/blog/financial-regulation-holding-back-growth  The government must make sure it does not repeat the mistakes of the financial crisis and take on too much risk in the name of regulatory innovation.

4. Where not to go it alone?

Global interconnectedness – manifested by cyber-crime, climate change and pandemics as well as, more mundanely, efficient trade – reduces the benefits of regulatory autonomy. Having increased its options by leaving the EU, the UK must develop the maturity to understand when the exercise of regulatory sovereignty brings benefits and when to defer to others. ⁴⁸ House of Lords European Affairs Committee, Corrected oral evidence: Dynamic alignment, 24 March 2026, https://committees.parliament.uk/oralevidence/17394/pdf/  As Brexit approaches its teens, politicians need to learn how to manage that balance – and bring the country with them.