Disunited? The future for regulatory divergence within the United Kingdom

Disunited? The future for regulatory divergence within the United Kingdom

Disunited? The future for regulatory divergence within the United Kingdom

At the beginning of the COVID-19 outbreak, the consolidated UK response saw all four nations of the United Kingdom emphasise their alignment with one another—a pragmatic approach that sought to provide clear, unified guidance to individuals and businesses, wherever they might be based across the country.

Particularly in recent days, however, with Prime Minister Boris Johnson allowing England to ease its lockdown and thus diverge from Scotland, Wales and Northern Ireland; the crisis has shed an uncomfortably bright light on the fragile equilibrium of our federal government and its devolved administrations. And only a mere few are viewing this as the major constitutional moment that it is.

Throughout March and April, we at Quiller found that clients operating nationwide were subject to a number of conflicting workplace guidelines, predominantly affecting companies with commercial premises on both sides of the Anglo-Scottish border. This early lack of alignment provided scope for confusion amongst business and, in most cases, required specific and ongoing government engagement from trade bodies.

The situation has only become more of a quagmire in the wake of the central UK government taking steps to reopen the economy. While getting the country moving again was always going to be more complicated than shutting it down, national variation in the rules has exacerbated an already unclear situation, leaving both business leaders and employees feeling muddled and vulnerable.

While it might be tempting to view this as a COVID-19 phenomenon, divergence between the four nations—politically and regulatorily—is only set to increase. Although Conservative and Unionist Party politicians like to ostentatiously tout the latter half of their official title when it suits them, the political reality in Scotland, Wales and Northern Ireland has been shifting for some time.

Take Scotland, for example, where recent YouGov polling for next year’s 2021 Holyrood election projected 54% support for the pro-independence Scottish National Party (SNP), with the Tories lagging behind on 23% and Labour on just 12%. These stark figures are not a novel trend, either. In December’s General Election, the SNP took a staggering 47 of 59 Scottish constituencies. Like it or not, the events of the past six years have only exacerbated the tensions that brought about the 2014 Scottish independence referendum.

None of this is to suggest that First Minister of Scotland, Nicola Sturgeon, has been politicking during the crisis. Her acknowledgement that the rate of virus transmission likely remains higher in Scotland than the rest of the UK is a sound explanation for deciding to stick with the ‘Stay At Home’ campaign. What it does tell us is that, in our post-pandemic future, the governments of Scotland, Wales and Northern Ireland will increasingly flex their devolved muscles as and when they see fit.

The situation will become even more acute once the UK decouples from the European Union at the end of the year. A major flashpoint for future regulatory difficulties is currently burgeoning in Northern Ireland, where the proposed post-Brexit border arrangements necessitate a dual tariff regime—essentially creating a customs border between Northern Ireland and Great Britain. While Northern Ireland will be required to stay in line with some EU Single Market rules, the rest of the UK will be free to diverge, potentially imposing regulatory checks on goods moving across the Irish Sea.

What does this mean in practice for companies operating across the four nations of the UK? With a wealth of Brexit-driven changes coming down the track, and with COVID-19 an externality we are likely to have to reckon with in the long term, it is clearer than ever that heightened regulatory divergence is here to stay—and this is something for which business need to be actively prepared. As many sectors have recently come to learn, resilience is key. As well as supporting clients with scenario planning, we at Quiller are consistently fine-tuning our future forecasting to stay one step ahead of the inevitable curve.

In a world that has brought us Brexit and Coronavirus in the space of less than five years, no watertight constitutional projections can reasonably be made—but it would be foolhardy to assume that everything will remain the same.