Britain Left Brussels: It did not Escape its Regulatory Consequences

Brexit was supposed to settle the debate about who gets to govern Britain. At the heart of the Leave campaign was the promise that decisions affecting British businesses, consumers and citizens would be made in Westminster rather than in Brussels. Ten years later, Westminster does indeed have greater freedom to diverge from EU rules. Still, the difference between being free to make different rules and being free from the consequences of doing so is becoming increasingly difficult to ignore.

The reason is brutally straightforward: Britain still trades with the rest of Europe. The European Union (EU) accounted for 41% of UK exports and 51% of imports in 2024, making regulatory divergence rather less ideological than it sounded in 2016. For a government trying to make Brexit work economically, the question is not whether Britain can diverge from European standards, but whether British businesses can afford the friction, when their largest nearby market continues to operate on a different regulatory framework.

The latest push by some Labour MP’s towards closer UK-EU cooperation makes that contradiction particularly difficult to ignore. Britain is working towards a common sanitary and phytosanitary area with the EU, including dynamic alignment with some European rules covering food safety, labelling, pesticides and animal and plant health. After years of political back-and-forth over ‘taking back control’ from Brussels, the British government is now considering arrangements that would bring parts of the British regulatory framework closer to Brussels’ framework. The political language may have changed, but Britain’s economic relationship with the European market has not disappeared just because its political relationship with the EU has.

That is not necessarily a failure of Brexit, but something more nuanced. Brexit changed the nature of the choice it faces, as Britain can now say no to EU regulation; however, saying no can carry financial consequences. Regulatory independence may give governments greater freedom, but businesses ultimately absorb the costs of a dual burden, creating a powerful incentive to continue meeting European standards even when Westminster is no longer legally required to do so.

The Brussels Effect

In this context, the Brussels Effect, coined by Anu Bradford, becomes relevant. The EU does not need to force Britain to adopt its standards for Brussels to exert influence over British rules and practices. When access to the European market is sufficiently important, companies are put in the compromising position of meeting European requirements even when they don’t necessarily have to. Meanwhile governments are left with a political calculation of their own: how much regulatory freedom is worth exercising if divergence makes trade for businesses more complicated and more costly?

Therein lies the greater irony of Brexit. Before leaving the EU, Britain was not being told what to do by Brussels; British ministers helped negotiate European legislation, British MEPs voted on it, and British officials helped shape the technical rules that businesses across Europe followed. Yes, Britain had less freedom to reject European regulation, but it did have a seat at the table: the table that sets the rules.

The Other Side of the Same Coin 

Outside the EU, that trade has been reversed. Britain has more freedom to walk away from European rules but less influence over what those rules become. While emerging arrangements for dynamic alignment may give the UK opportunities to contribute to European decision-shaping, that is not the same as having a vote in the institutions making the final decisions. Britain has therefore exchanged one form of sovereignty for a different political reality, i.e., greater control over whether it follows European rules, but less control over the rules themselves.

The sovereignty acquired after Brexit was not entirely meaningless. Leaving the EU did mean the government could pursue policies better suited to British circumstances. But sovereignty is only one form of power; influence is another, and the difficulty for Britain is that exercising the first does not necessarily preserve the second.

Britain no longer follows EU rules because it is a member of the European Union. However, the question increasingly facing Westminster is whether, when the economic costs of divergence become too high, it can afford not to.

Image: Wikimedia Commons/Europäische Kommission - Audiovisueller Dienst

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