The CBI has warned Britain’s multi-billion pound digital economy is “at risk of isolation” as a result of Brexit.
Britain could be forced to toe the Brussels line on crucial legislation on privacy and national security for years after Brexit in order to maintain the free exchange of data with EU countries.
A new Government paper makes clear that, under current arrangements, the European Commission will have the unilateral power to decide whether the UK’s legislative framework is “adequate” for the flow of the commercially valuable data to continue unchecked following EU withdrawal.
Officials have no doubt Britain will meet the “adequacy” test on the date of Brexit, expected in 2019, but that may change if UK legislation on issues like data collection and protection diverges from the EU rulebook in the years to come.
The paper reveals the UK is hoping to persuade Brussels to reach early agreement on an unprecedented new mutual recognition model which would respect Britain’s sovereignty and remove uncertainty over whether it can maintain adequacy status.
The CBI has warned Britain’s multi-billion pound digital economy is “at risk of isolation” as a result of Brexit unless the Government secures a transition agreement avoiding interruptions to the flow of data.
And trade body TechUK has said securing a watertight legal framework for the industry post-Brexit will “take time”. Previous adequacy agreements with non-EU countries have taken 18 months or more to conclude.
The new Government document, published ahead of the third round of formal Brexit talks in Brussels next week, acknowledges uncertainty over the future data relationship between the UK and EU “may force businesses on both sides to incur unnecessary expense and time in contingency planning or put them under pressure to renegotiate what may be less favourable contractual arrangements”.
It warns any disruption in cross-border data flows would be “economically costly” to both the EU and UK, and new restrictions on the exchange of information would “harm both economies”.
The EU data economy is forecast to be worth 643 billion euro (£592 billion) by 2020, and the CBI says the sector could soon reach a value of £240 billion.
Sharing personal data is also “essential” to the fight against terrorism and serious crime, the Government paper states.
The paper calls for early UK-EU agreement on mutual recognition of data protection frameworks, with an agreed timeline for longer-term arrangements.
And it seeks assurances that flows of data between the UK and non-EU countries with adequacy agreements – such as the US, Canada and New Zealand – can continue on the same basis following Brexit.
It makes clear that current EU directives on data protection will be written into UK law and calls for Britain’s Information Commissioner to continue to take full part in discussions with EU counterparts following Brexit.