Report reveals high EU regulatory costs for UK economy – calls for radical reform
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Report reveals high EU regulatory costs for UK economy – calls for radical reform

The think tank Open Europe says the annual cost to the UK economy of the 100 “most burdensome” EU-derived regulations stands at €46.6bn. The report also finds that if the UK were to swap full membership for the EEA membership – the so-called ‘Norway option’ – 93 of the top 100 would remain in place at a cost of €43.9bn.

Pawel Swidlicki, from Open Europe, said,  “The bad news is that overall, EU regulation costs too much in relation to the benefits it generates.

“The even worse news is that if the UK left the EU and became like Norway, 94% of the cost associated with the most burdensome EU rules would remain in place but the cost would be even harder to cut, since Norway has no formal voting powers over EUrules.

“Radical reform from within the EU or a far better trading model outside of it remain the UK’s best options for cutting regulatory costs.”

The report says that based on the UK government’s own Impact Assessments, in 2014 prices, the total cost to the UK economy of the top 100 EU-derived regulations is €46.6bn a year.

According to the impact assessments, the top 100 EU regulations provide a total benefit of €82bn a year. However, €64bn of this benefit stems from just three items which the UK-based OE says is “over stated.”

The report says, “For example, the stated benefit of the EU’s climate targets was dependent on a global deal to reduce carbon emissions that was never struck.

“In fact, Open Europe estimates that up to 95% of the benefits envisaged in the impact assessment have failed to materialise.”

The study also states that taking the regulations individually, the impact assessments show that ministers signed off at least 26 of the top 100 EU-derived regulations, despite  “explicitly stating that the costs outweigh the estimated benefits.”

These regulations include the UK Temporary Agency Workers Directive and the Energy Performance of Buildings Directive.

It goes on to say that a further 31 of the costliest EU-derived regulations have not been quantified.

“Between the over-stated benefits, the regulations that come with a net cost and the ones with unquantified benefits, it remains unclear how many of these EU-derived rules actually come with a net benefit in reality, showing that there is plenty of scope to cut regulatory cost to business and the public sector.”

Open Europe say that although the cost of EU regulation is too high in proportion to the benefits it generates, “it is important to note that these rules can bring benefits including by facilitating trade across the single market, for example in the case of financial services rules such as MiFID.”

It says, “If the UK were to leave the EU, the costs would not disappear overnight – much would depend on what path Britain took outside the EU.

“In particular, if the UK were to leave the EU and instead ‘become like Norway’ by joining the European Economic Area (EEA), 93 out of these 100 costliest EU-derived regulations would remain in place.”

“This is because under EEA, many EU policy areas would continue to apply to the UK including financial services, social and employments laws, energy and climate change policies, as well as the full free movement of people.

“Given that EEA membership comes without any formal voting powers in the EU institutions, the UK would lose its ability to both amend these regulations and shape new EU laws.”

Over the last two years, it says the EU has taken some “welcome” steps to relieve the pressure of EU regulation on businesses citing the appointment of Frans Timmermans as Vice-President of the European Commission with a responsibility for Better Regulation.

“Since his appointment, Timmermans has already proposed scrapping 80 out of 450 pending legislative proposals, however, there is still a long way to go, particularly in terms of addressing the existing stock of EU legislation.”

By Martin Banks