The UK Government stands to take control of more than £470 million in annual expenditure post-Brexit by no longer having to directly fund the running costs of around 21 EU institutions and agencies.
European law firm Fieldfisher has undertaken an analysis of the UK's budgetary contribution to the administrative costs of 67 EU institutions and agencies. Based on Fieldfisher's analysis, the UK's total administrative contribution currently stands at around £620 million annually. Following Brexit, it is likely that much of the budget will need to be redirected to support functions inside the UK.
John Cassels, Co-Head of Fieldfisher's Regulatory Group, says: "The administrative cost savings associated with Brexit do appear to be attractive. However, the reality is that the regulatory transition required to repatriate functions of EU agencies back to the UK is likely to be disruptive to regulated businesses and individuals, as well as to the UK civil service itself."
The firm's Regulatory Group estimates that the Government will need to contribute around £35 million annually to part-fund several EU agencies with which the UK will need to maintain a strategic partnership. Such agencies, as recognised in DExEU's Brexit white paper, include those which regulate aviation safety, maintain electricity transfer arrangements, and deal with energy regulation, data protection, defence policy, policing, and approaches to security and environmental policy.
A further £114 million constitutes the UK's contribution to EU agencies whose functions will need to be repatriated to their UK counterparts, or to entirely new UK government agencies set up for the purpose. An example is the European Banking Authority, the functions of which are likely to be picked up by the Prudential Regulation Authority.
"The major administrative challenge of repatriating the functions of EU agencies to their UK counterparts, while minimising disruption for regulated individuals and entities, represents one of the most challenging aspects of the Brexit process", Mr Cassels reports.
The biggest savings, estimated to be around £470 million annually, will come from no longer having to fund bodies such as the European Parliament, the EU's diplomatic service (the European External Acton Service), the European Council, the Court of Justice, and the European Anti-fraud Office (which investigates and prevents fraud against the EU budget). In each of these cases it is likely that to some degree, functions currently carried out by EU institutions and agencies currently, will need to be carried out by equivalent agencies in the UK, meaning budgetary allocations to the latter will likely continue.
George McLellan, a lawyer in the firm's Regulatory Group who assisted with the report said: "to minimise disruption that may be caused in the transition process, businesses which are regulated by EU and UK agencies will need to ensure that they monitor who their regulators are and what EU regulation will continue to apply to them for UK-purposes post-Brexit.
"Naturally, one advantage of any major change process is that it creates opportunity for improvement. Wherever regulated businesses have bright ideas for smoothing out the transition process, or for improving the manner in which EU regulation applies for UK purposes, they may wish to raise their ideas directly with the relevant UK agencies."
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John Cassels, Co-Head of Fieldfisher's Regulatory Group, on 020 7861 4948 / 07917 040 576 email@example.com
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