EU Data Protection Regulation: Divergence or Allegiance?

The tech industry in the UK has issued a warming to the leading ministers that a transition away from EU data protection standards following Brexit will damage the UK’s status as a technology hub.

This is following reports of a growing misunderstanding among Brexiteers that diverging from the tough EU data protection laws may allow Britain to gain a comparative advantage compared to other EU states in this fast growing sector.

The UK and EU data protection flows:

Thanks to a strong regulatory environment, central time zone and its geographical location between the US and continental Europe, the UK handles 11.5pc of worldwide data flows, which equates to nearly 4 times its share of GDP. The UK is also the leader in digital start-ups in Europe, with 43pc of all large digital companies being started in the UK. The UK also boasts a £7bn ‘fintech’ industry, employing over 60,000 people as part of the financial services industry. This is worth a huge total of £124bn a year.

Divergence or allegiance?

TechUK, which represents nearly 1000 tech firms in the UK, has praised the work of the Department for Digital, Culture, Media and Sport for implementing the EU’s new GDPR. GDPR will be fully implemented in UK law in the UK ahead of Brexit. TechUK argue that remaining compliant will be essential to both retaining and strengthening the UK’s position as a global technology and data hub.

Brexit ministers have argued that the UK needs to have divergent regulation in order to succeed in areas such as artificial intelligence, which is likely to be a significant growth sector in the future. TechUK however argue that common regulation is the base of international trade deals and divergence from this commonality will lead to problems in the future.

It is argued instead that the UK should use its position as an industry leader in order to exert soft power and use this to influence the EU’s approach to data regulation. It remains to be seen whether the EU will allow the UK to have a say in regulations following Brexit.

Thus whether or not the UK decides to diverge from EU data regulation remains to be seen. What is certain however is that data flows between the UK and the EU are important for the economic performance of the UK. In addition, aligning policy with the EU gives certainty for businesses and consumers that high protection standards will continue after Brexit.