Joël Reland / Jul 2025
Image: Shutterstock
It’s fair to say that our UK-EU Regulatory Divergence Tracker is a niche product. But, now in its thirteenth edition, this is the first time that its headline finding is already common knowledge. Following the high-profile UK-EU summit in May, it will come as no shock to hear that the scale of ‘alignment’, where UK and EU regulations move closer, is increasing.
But what might be more surprising is that the scale of alignment goes well beyond what was committed to in May. All in all, the tracker identifies 21 cases of alignment, compared to four in the previous edition, thanks to a number of low-profile decisions by the UK to shift its policy positions closer to the EU’s.
What this tells us is that the much-vaunted EU ‘reset’ is about more than a few agreements on defence, trade and mobility. It reflects a fundamental shift in UK government thinking, where the EU is now, more often than not, a regulatory model to follow.
For most of Brexit history, the opposite has been true. Under the Johnson government in particular, the fact that a policy diverged from the EU was treated as an almost prima facie good, with departments instructed to find as many EU-era ‘regulatory barnacles’ to strip away as possible.
Now, the default assumption appears to be that divergence is best avoided unless there is a clear rationale for doing so (e.g. on financial services and AI). Yet, in practice, maintaining alignment is not easy – and three different approaches are being taken simultaneously.
First is dynamic alignment – the meatiest form of alignment and a key feature of May’s UK-EU summit, where the UK committed to adopt EU law in three areas (veterinary standards, emissions trading and electricity), now and in the future, with virtually no say over it, in return for much more privileged access to the single market.
This is the most economically consequential form of alignment – as it actively removes barriers to trade created by Brexit. The veterinary deal, for example, will do away with the vast majority of checks and paperwork on UK-EU agrifood trade – which it is estimated could boost UK agrifood exports by a quarter.
But there are limits to how far dynamic alignment can go. There are only a few more areas where the UK could conceivably seek dynamic alignment – perhaps conformity assessments or chemicals – and even these might be rebuffed by the Commission as ‘cherry picking’ selective access to the single market.
Moreover, the EU may well ask for budget contributions or the acceptance of freedom of movement (as Switzerland is signed up to) in return for further dynamic alignment; and those two issues remain clear red lines which the UK is not willing to cross.
Thus, in some sectors the UK is instead opting for a model of ‘voluntary alignment’, based on unilaterally mirroring EU law – in either letter or spirit – without any agreement with the EU. Voluntary alignment does not remove any barriers to trade created by Brexit (such as checks and paperwork) but it does create stability for businesses (who know they can work to the same standards whether they are serving the EU, GB or NI market) and avoids the UK becoming a regulatory laggard.
When it comes to consumer and market protections in particular, there are clear signs that the UK now wants to maintain pace with EU standards. Take digital competition, where the government has instructed to the Competition and Markets Authority (CMA) to take ‘parallel’ actions to the EU. This has led the CMA to initiate a probe into Google which mirrors a Commission investigation from last year, using powers under the 2024 Digital Markets, Competition and Consumers Act – which bears an uncanny resemblance to the EU Digital Markets Act.
The government is also passing the Product Regulation and Metrology Bill to give it powers to mirror EU product regulations – meaning recent EU interventions on ecodesign, product liability and general product safety could soon all be copied onto the UK-wide statute book.
A final form of alignment is that of ‘coordination’. This is a much looser concept which does not require any formal treaty or the passage of UK legislation. Instead, it is about the UK and EU acting together on topics of shared interest.
With the change of UK government, as well as the US retrenchment from the global rules-based order, there are an increasing number of files on which the UK and EU appear to recognise they could do more to uphold common interests.
The UK has committed to joining an EU-backed ‘stop-gap’ replacement for a WTO arbitration body (to which the US is opposed), describing it as a commitment to the ‘principles of free and fair trade’, while it is also supporting EU efforts to build an alliance with the trans-pacific ‘CPTPP’ trade bloc, in the name of strengthening ties between pro-free trade nations. Meanwhile, the EU’s new International Digital Strategy promises to build more international alliances to support the ‘rules-based global digital order’, which may well involve the UK.
The two sides have developed a strikingly similar set of measures to try and boost their flagging economies: with plans to cut back ‘red tape’ for business; new industrial strategies to reduce businesses’ energy costs; ‘action plans’ to upscale AI infrastructure; and ambitions to direct more consumer savings into capital markets. The TCA’s committee structures could be a forum to share expertise or ideas related to these issues – as is already happening on some items of common interest like the circular economy and green finance.
Following the May summit I argued that the UK’s EU policy is now dictated more by rational self-interest than ideological purity. The evidence from the divergence tracker adds further weight to this view. Trying to limit regulatory divergence with your closest trading partner, while increasing soft-touch cooperation in areas of common interest, is what a rational EU policy looks like.
