EU-turn - Resetting the UK-EU relationship through strategic dynamic alignment

Our past research showed that 45 per cent of the long-run impact of Brexit would come from on-going divergence and forgone deeper EU alignment, and that this would materialise gradually as the both the EU and UK update and implement new regulations.1 Examples of recent deepening of regulatory integration within the EU Single Market include the Digital Single Market Strategy, the European Green Dea. [...] As discussed in recent research, there are signs that the current Government is open to a more pragmatic approach to addressing regulatory frictions with the EU: the Chancellor has publicly discussed regulatory alignment on chemicals and the Government introduced the ‘Product Safety and Metrology Bill’ in the July 2024 Kings Speech. [...] But shifting from the approach of the previous Government, which prioritised greater regulatory freedom and sovereignty over reducing trade barriers with the EU, means explicitly confronting the trade-off with regulatory autonomy and the role of the European Court of Justice. [...] The impact on businesses will depend on both the depth and breadth of the arrangements that are pursued and implemented by the Government. [...] The left panel shows the UK Trade Policy Observatory’s regulatory intensity indices, which highlight the sectors experiencing the largest increases in regulatory intensity in the EU between 2010 and 2021: chemicals, machinery, and vehicles.5 The right panel shows UN Trade and Development data on the number of new EU non-tariff measures (i.e.