How does the EU impact small businesses, and what benefits could leaving present them?

27 April 2016

Eurosceptics often argue that British businesses would be subject to less regulation from the EU after Brexit. However, if after leaving, the UK gets a Norwegian- or Swiss-style deal, then this will not happen. To access the single market, Norway and Switzerland must adopt the same regulations as the rest of the EU (without having a vote on what these regulations are).

After leaving, the British government could weaken social, employment and environmental regulation to some degree. But half of the estimated cost of these EU regulations comes from just two policies: the Renewable Energy Strategy and the Working Time Directive. Scrapping these regulations would mean abandoning Britain’s renewable energy targets and removing rights such as the entitlement to 20 days paid annual leave – and this would be politically difficult. Moreover, Britain already has some of the most flexible employment and product market regulations in the world, according to the OECD (second in product regulation, and third in labour regulations). So the added gains from rolling back the laws derived from the EU are likely to be small.

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