Boris urged to shrug off EU’s ‘constraining’ system to make innovation soar post-Brexit

Brexit: EU 'needs to be reasonable' warns Truss

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A lengthy document published today details a proposed path ahead for the nation just months after the Brexit transition period ended. It was produced by arch Brexiteer and former Tory party leader Sir Iain Duncan-Smith, former environment secretary Theresa Villiers and ex-minister George Freeman.

The authors urged the Prime Minister to shrug off the EU’s code-based system which “too often results in complication and statutory inflexibility which ends up limiting innovation and constraining business”.

Boris Johnson had tasked the trio with identifying proposals to drive innovation, growth and competitiveness through regulatory reform in Britain after Brexit.

The report says: “The EU’s code-based system, applies prescriptive statutory rules.

“It seeks to accommodate the views of an array of national legislators and too often results in complication and statutory inflexibility which ends up limiting innovation and constraining business.

“These complicated and statutory processes have often ended up with the European Court of Justice, whose purposive method of interpretation seeks to apply detailed political purposes across a swath of provisions.

“Worse, as any lawmaker will observe, the statutory and inflexible model is difficult and time consuming to change.”

It continues: “It is not just the code-based approach that had an insidious effect on the UK’s regulation.

“The way the ‘Precautionary Principle’ has been applied by the EU has meant some innovations have been stifled due to an excessive caution that is often disproportionate to the associated risk.”

The authors also painted a rosy picture for Britain outside of the EU and said it had the opportunity to become a world leader on financial free zones.

The advice for the Prime Minister comes just a day after he announced his first big post-Brexit trade deal.

He hailed the historic agreement with Australia saying it marked a “new dawn” in relations between London and Canberra.

The pact is seen as a precursor to Britain joining a wider Asia Pacific free-trade agreement known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

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The report said: “Uncodified systems such as common law have historically been and continue to be the systems of choice for many successful jurisdictions.

“The clear trend for new financial free zones – bespoke jurisdictions designed to be magnets for economic activity – is to opt for a common law approach.

“It is fortuitous that the UK – still regarded internationally as the pioneer and guardian of this tradition – has the opportunity to re-emerge as a global leader in this trend.”

Mr Johnson welcomed the report’s findings and wrote a letter to the three Tory MPs to thank them for their work.

He told them their “bold proposals provide a valuable template” for cutting through what he called a “thicket of burdensome and restrictive regulation” that has grown around business in the last half a century.

In financial services, the report backs loosening limits on the size of a position that can be held in commodity derivatives to make it easier to develop new products.

Rules for setting margins or cash deposited at a clearing house to support trades should be more flexible, and the burden of anti-money laundering rules on fintechs reduced.

“Onerous” rules inherited from the EU that require market participants to report data on trades to regulators should be softened.

The authors also pushed for the development of a digital pound.

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