The UK internal market

Think tank: Institute for Government

Author(s): Jess Sargeant; Maddy Thimont Jack

June 24, 2021

This report from UK think tank the Institute for Government looks at balancing frictionless trade and regulatory autonomy.

A new approach to the UK internal market is needed to avoid a collision course between the UK government and the devolved nations which could erode support for the union. A well-functioning internal market will mean fewer barriers for businesses, better value for consumers, and a thriving UK economy. This report sets out how the UK and devolved governments can ensure the UK internal market fills the void created by the loss of the EU single market framework, allowing for smooth intra-UK (if not GB–NI) trade while preserving the four governments’ ability to diverge. But to avoid repeated battles over English food standards being forced upon Scotland and Wales and the risk of barriers to trade between GB and Northern Ireland increasing, the UK government must stop ignoring the objections of the devolved nations. The devolved administrations should also show more willingness to cooperate with the UK government and take this opportunity to shape the intra-UK trade system. The UK government needs to protect the UK economy whilst respecting devolution, managing regulatory divergence between the four nations – including that created by the Northern Ireland protocol – by agreement not diktat. The report makes four recommendations to ensure the UK internal market functions effectively.