British companies risk billions in new costs if EU blocks data sharing deal
A report warned costs would be 'disproportionality falling on SMEs at a time when the economy is already severely challenged'
By Hannah Boland 23 November 2020 • 6:00am
British companies risk being hit with £1.6bn in new costs if Brexit negotiators fail to strike a deal over data standards, researchers have warned.
A report from the New Economics Foundation and UCL European Institute released today said that British companies were facing steep new legal fees if the EU decided that post-Brexit UK data standards were not adequate and halted data flows between the two regions.
Organisations including banks, technology companies and insurance firms currently transfer data, such as personal information or financial details, between the EU and UK so that they can process it.
After the Brexit transition period comes to an end, the UK will no longer be included under the EU data protection regime, and will require a separate "data adequacy agreement" to allow information to continue to pass to and from the bloc.
If such a deal is not agreed, companies could be forced to agree to new contractual clauses should they want to transfer information between trading blocs in what is a costly legal process.
It is feared smaller businesses may not be able to pay these fees, with the report on Monday warning that they could face average compliance fees of up to £10,000. Medium businesses, meanwhile, would face an average of £20,000 in compliance costs.
New Economics Foundation senior researcher Duncan McCann said the costs would be "disproportionately falling on SMEs, at a time when the economy is already severely challenged by the pandemic and trading conditions are difficult". In total, the study suggested UK companies could face between £1bn and £1.6bn in extra costs, making it tougher for them to invest in new technology, staff and research.
A deal on data is not required for Brexit negotiations to progress, and it is up to the European Union to grant Britain a 'data adequacy' agreement. EU officials had previously warned that the UK was at the end of the queue for such a deal, saying it could take years.
Over the summer, further doubts were cast over a deal, as Europe's top court threw out its US data-sharing deal which had underpinned transatlantic digital trade for more than 5,000 companies.
The move was seen as setting a "high bar" for an adequacy decision by lawyers.
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