Brexit's red tape challenge.

Author:Hopkins, Christopher

THE UNITED KINGDOM June 23 referendum resulted in a vote to leave the European Union. Much has been said about how eventual "Brexit" may impact upon the UK politically, but this article instead will explore what effect this could have on regulation and doing business in (or with) the UK.

Background. Reduced business regulation or "red tape" long has been a target of the UK government. Following election in 2010, the previous coalition government launched its "Red Tape Challenge" to reduce the overall burden of regulation. This touched upon a multitude of different "themes," including health and safety, the environment, employment, and manufacturing. By the end of 2014, the coalition claimed to have saved businesses 10,000,000,000 [pounds sterling].

The coalition's aims undoubtedly were frustrated by the UK's membership on the EU. For instance, it is estimated that between 80%-90% of the UK's environmental legislation is derived from EU legislation, making it difficult--if not impossible--for the UK government to alter. New construction site safety regulations were introduced in 2015, in part because the previous legislation exempted homeowners from many of the requirements ' that commercial clients were subjected to, and this was not thought to comply with the underlying EU directive.

The drive to limit red tape has continued under the new conservative government elected in 2015. Given that Brexit ultimately could oust, or at least limit, the reach of EU legislation (and we will have to wait and see what, if anything, the UK is required to keep or adopt when it comes to negotiate trade deals with the EU and others), it will be of interest to both UK and foreign businesses how Brexit could impact upon key areas of regulation associated with doing business in the UK--economic crime, export and sanctions controls, health and safety, and the environment.

Economic crime. The UK has one of the strictest anti-bribery laws in the world. This is a product of domestic--not EU--law, and so is unlikely to change, although proposals for a new corporate offense of failure to prevent economic crime may be withdrawn. Likewise, the UK's anti-money laundering legislation ultimately stems from international agreements that the UK is party to, and so it probably will not be affected by Brexit.

What may change, however, is how these laws are enforced since there will be pressure to ensure that UK businesses remain competitive and are not unduly restricted in...

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