The Economist (20210313) by calibre

Author:calibre
Language: eng
Format: azw3, mobi, pdf
Tags: news, The Economist
Publisher: calibre
Published: 2021-03-12T04:02:09.539000+00:00

Not shredding, but polishing

Within these constraints, the government still has substantial leeway to rethink how Britain regulates itself. Red tape will not be slashed, but ministers can trim away reporting obligations, such as having new railway signals approved by the regulator in Lille—a measure intended to smooth travel over land borders, and which is less useful for an island nation. Mr Eustice’s department thinks the EU’s pesticides regime can be simplified without weakening it. The Civil Aviation Authority thought leaving the European regime senseless, but now says the rulebook could be rationalised. No voter will notice such changes, but they may produce incremental dividends.

The government is planning to change the way it gives money to the private sector. It wants to invest in scientific research and poor regions. EU state aid and procurement laws are strict, to prevent rich governments favouring their producers. Now that Britain is out, that is less of an issue. Procurement rules will be simplified. Britain’s state-aid regime will be more permissive, with public authorities given greater leeway to make awards so long as they are proportionate and don’t prop up dying firms. That should result in more innovative policies from local government, and help universities commercialise research, says James Webber of Shearman & Sterling, a law firm. Critics warn of waste and creeping corporatism.

The Competition and Markets Authority, keen to stand tall alongside its peers in Australia and Japan, has ideas on boosting competition, which it thinks fell in the two decades to 2018. “Many regulations create barriers to entry from which incumbents derive huge benefits,” says Andrew Tyrie, the CMA’s former chair. The agency has proposed scrapping the EU’s regime on allocating airport runway slots, which favours incumbent airlines. It has taken on the biggest antitrust probes previously reserved for Brussels, and plans an innovative regime for tech giants.

The greatest scope for divergence lies in sectors where Britain has a critical mass of activity, notes Thomas Reilly of Covington & Burling, a law firm. Mr Eustice’s department is consulting on loosening EU rules on gene editing, which can produce more disease-resistant crops, bringing Britain into line with Japan and Australia. As Sir Michael forecast, the MHRA has created a fast-track approvals process to get innovative treatments to market faster, which enabled it to approve covid-19 vaccines far faster than the EMA.

Then there’s the City. The EU is weighing whether to deem Britain’s regulatory regimes “equivalent”, which would grant asset managers and insurers market access, but financiers are not sure that the prize is worth the price of accepting EU rules. Andrew Bailey, the governor of the Bank of England, has said Britain should not become a rule-taker. There is little clamour for deregulation, but there is room for improvement. Insurance firms think regulation could work better for them than the EU’s Solvency II rules, which reflect the way continental firms are structured. Challenger banks want prudential capital rules to be tweaked to make the banking business more competitive, and Mr Bailey thinks rules can be simplified for small banks that serve only the domestic market.

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