As the UK heads towards the EU’s exit door, there is an urgent need for a new economic model. A recession looks likely, and even the optimists concede that the next few years will be challenging for the UK economy.
Although much of the Leave vote was driven by concerns over the unfettered impacts of globalisation on living standards, there is a worrying strand of political thought that suggests the UK should reinvent itself as a tax haven, with low social and environmental protection (which is what less ‘EU red tape’ means) and high barriers to immigration. However, there are other models on offer, which may prove more attractive, realistic and sustainable in tackling the economic challenge.
Social and business benefits
If the UK is to go it alone, then it should be looking ahead to spot future economic megatrends, and leveraging them to improve its competitiveness in the global market. The transition to a circular economy is one such trend. It favours keeping valuable resources in use for as long as possible, through reuse, repair, remanufacture and recycling and its economic benefits are huge. Green Alliance’s research has shown that a more circular economy offers the potential to create many new jobs and how much consumers and businesses can also benefit. Many businesses are already embracing the possibilities.
The European Union has produced its own Circular Economy Action Plan and the UK has been engaged up until now in its development. But how should Brexit Britain respond now? We still don’t know what the new framework will be for our relationship with the EU. It is undisputed, though, that we will need to continue trading with our European neighbours, whether it secures close integration through some kind of association agreement, or even a worst case WTO-only scenario. Under any scenario, ensuring that Britain is ahead of the curve on the circular economy would be a no-regrets option, for companies and for politicians.
Implications of the plan
It’s worth looking at the implications of this action plan for UK business. It includes a range of 54 initiatives which will be rolled out in the coming years. Already in play is the waste directives package, proposed by the Commission and currently being considered by both Parliament and Council. The aim is to reduce waste across Europe, by setting new targets to cut the amount of waste and creating a more competitive market for waste management.
The action plan also addresses how to make products more ‘circular’, using the Ecodesign Directive. The principle of ecodesign will be expanded to make products not just more energy efficient, but also more durable and sustainable. This focus on product design is essential for a circular economy, designing out waste rather than just improving waste collection.
One big challenge is to ensure that resources can remain in use, rather than ending up in landfill or as litter. Alongside the targets in the waste directives, the EU will be strengthening the market for secondary raw materials, by developing clear standards so companies know what they are buying and are encouraged to reuse resources rather than using primary resources for their inputs. A plastics strategy in 2017 is also likely to lead to a ban on microbeads in cosmetics (something the UK already supports) and measures to improve recycling and reduce plastic waste.
EU standards will still have an impact on Britain
In the event of securing membership of the European Economic Area (EEA), the so-called Norway option, the UK would remain within the single market, and would need to comply with its rules to access its advantages. Even under a free trade agreement, the UK will still need to ensure that products targeted at the EU market meet the resource efficiency standards it sets. Since that market is much larger than the UK, standards adopted by the EU will still have a large impact on Britain.
Both new ecodesign regulation and the waste directives would continue to apply to the UK, if we have EEA membership since they are single market provisions. Standards for secondary materials are also designed to make the market work better, so would fall under this heading. And even an agreement which leaves the UK outside of the single market would require the UK to comply with new and evolving product standards to trade with the EU.
The UK does not want to turn its back on Europe. So, rather than resenting new European measures designed to improve resource efficiency, we should build a new competitiveness based upon product quality and resource efficiency to put us in a strong position for future trade. This is likely to prove a more successful strategy than trying to undercut the EU on social and environmental standards. After all, the driver for a circular economy is economics, not politics. The results will be greater competitiveness, and strong benefits for UK businesses, consumers and the environment. Whatever the political and legal framework that eventually emerges from Brexit, the UK should definitely position itself at the leading edge of Europe’s new circular economy.