Four questions the UK government must answer in the years ahead<\/p>\n
From the UK\u2019s current position, on the eve of the 10th anniversary of the decision to leave the EU, ministers should focus pragmatically on four questions.<\/p>\n
1. How to retain regulatory credibility outside the EU?<\/p>\n
Ministers have yet to learn to resist the populist impulses that can harm the UK\u2019s appeal as a market. An early example was the Starmer government\u2019s decision to overrule the first finding of its new, independent, Trade Remedies Authority \u2013 and then to reduce its powers. Gill M and Bishop M, How to set up a public body, Institute for Government, 2024, www.instituteforgovernment.org.uk\/publication\/how-to-set-up-a-public-body<\/a>, p. 19 <\/p>\n The UK needs to maintain confidence in the consistency and fairness of its competition regime, and in the predictability and stability of its utilities regulation<\/a>, for example, if it is to maintain the economic activity and inward investment it needs. Haile D and Chivukula S, Investing in water and energy: What is government\u2019s role in delivering infrastructure?, Institute for Government, 2025, www.instituteforgovernment.org.uk\/publication\/utilities-regulation<\/a> <\/p>\n \u00a0The EU is no longer there to act as a brake.<\/p>\n A sewage treatment plant in Leicester. The UK needs to maintain confidence in the predictability and stability of its utilities regulation.<\/p>\n 2. How and where to exert meaningful global influence?<\/p>\n The UK had ambitions after Brexit to be a regulatory innovator the world would follow. But even in AI regulation \u2013 a political priority where the UK has so far diverged markedly from other countries \u2013 it has had to recognise that its capacity to exercise global leadership is limited. Rishi Sunak\u2019s 2023 AI summit<\/a>, at which the UK convened and catalysed global thinking about emerging issues, so far seems to have been a high watermark of the UK\u2019s global influence in this field. Gill M, Rishi Sunak\u2019s AI summit gamble paid off, Institute for Government, 2023, www.instituteforgovernment.org.uk\/comment\/rishi-sunaks-ai-summit-gamble-paid<\/a> <\/p>\n Rishi Sunak at the AI Safety Summit in 2023.\u00a0<\/p>\n Exercising effective global leadership will require the UK to develop deeper capability in regulatory diplomacy, and to practise it in a sustained way. AI will be a test case of how far regulatory nous can substitute for market power in underpinning such diplomacy.<\/p>\n 3. How to act as a global sandbox without taking on undue risk?<\/p>\n The UK\u2019s greater freedom to set its own rules after Brexit has created the opportunity to move faster and develop more creative regulatory regimes, particularly in areas of comparative advantage like financial technology and life sciences. Firms may be attracted to the UK by the responsiveness of its regulation in these areas which can, for example, enable new markets to build trust. But responsiveness should not imply a race to the bottom, attracting rogue operators.<\/p>\n The UK may be tempted to take more risk to achieve short-term growth. This temptation is most transparent in financial services, where prudential regulation and growth are often (wrongly) seen to be in direct tension. National Institute of Economic and Social Research, Is Financial Regulation Holding Back Growth?, 16 January 2026, https:\/\/niesr.ac.uk\/blog\/financial-regulation-holding-back-growth<\/a> <\/p>\n \u00a0The government must make sure it does not repeat the mistakes of the financial crisis and take on too much risk in the name of regulatory innovation.<\/p>\n 4. Where not to go it alone?<\/p>\n Global interconnectedness \u2013 manifested by cyber-crime, climate change and pandemics as well as, more mundanely, efficient trade \u2013 reduces the benefits of regulatory autonomy. Having increased its options by leaving the EU, the UK must develop the maturity to understand when the exercise of regulatory sovereignty brings benefits and when to defer to others.
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