UK small businesses face crippling costs unless the UK can show the EU that it has adequate levels of data protection, according to research from UCL’s European Institute and the New Economics Foundation.

The Cost of Data Inadequacy is the first major report to look at the impact on business and the economy if the flow of data between the EU and the UK is disrupted because of the lack of an ‘adequacy decision’. It puts the overall cost of that scenario to British companies at between £1bn and £1.6bn.

Data adequacy decisions, in which the EU certifies that a country has the appropriate level of data protection, are essential for everything from enabling online shopping to powering research collaborations.

In the event of a no-deal Brexit, or a deal but then no adequacy decision, small and medium-sized firms will be disproportionately affected by the disruption. The average compliance cost estimated at £3,000 for micro, £10,000 for small, almost £20,000 for medium and about £163,000 for large businesses.

Oliver Patel, Research Associate at the UCL European Institute said: “In recent years, the European Court of Justice has taken a much tougher approach to restricting data transfers between the EU and other countries, much to the consternation of the business community. Post-Brexit, there is a risk that EU-UK data transfers could be targeted by activists and European courts, seeking to exploit the rigid EU rules in this area”.


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