This new data law could spell billions in losses for UK companies in lost sales contacts, and increased compliance costs in meeting two separate regulation frameworks. Compliance costs are estimated to cost British businesses up to £1.6 billion alone according to a report by the New Economics Foundation. 

The bill itself was meant to replace the Data Protection Act which was established in 2018 by the UK to enact the EU’s GDPR in post-Brexit Britain. Now, the UK Data Protection and Digital Information Bill aims to save £4.7bn over the next decade, and be easier to understand and comply with according to Science, Innovation and Technology Secretary, Michelle Donelan.

“The Government claims that the UK’s proposed, so-called “common sense” version of the EU’s GDPR regulations will save the economy £4.7bn over ten years. However, if the EU decides that Britain’s new data protection rules diverge so far from its own that they are no longer adequate, it’s likely that British businesses would lose billions instead,” said David Jinks, head of consumer research at ParcelHero, an e-commerce delivery expert. 

The UK’s digitally delivered services make up over 73% of all services exported to the EU. An Office for National Statistics report on digital trade showed that the UK’s digital services to the EU were worth £21bn in 2020, digital consulting at over £18bn and digital telecoms and information services at over £10bn.

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“Should the UK’s data protection regulations no longer be deemed adequate by the EU, the cost of losing access to the EU services market is almost unthinkable,” said Jinks. Meaning that if all GDPR regulations are not met, EU-based companies would no longer be able to share information, disrupting the UK sellers’ access to its marketplace. 

The decision on if the new bill meets EU standards is not completely up to the UK government to decide. According to the Information Commissioner’s Office (ICO), the EU Commission can amend, suspend, or repeal decisions if issues with the new UK data protection law cannot be resolved. 

“If the European Commission makes any negative decision regarding the adequacy of the UK’s reformed standards, the flow of personal data between the two jurisdictions is like to face obstructions, which would be especially costly for businesses to overcome,” according to the ICO.

The new Economics Foundation report says: “This extra cost stems from the additional compliance obligations – such as setting up standard contractual clauses (SCCs) – on companies that want to continue transferring data from the EU to the UK. We believe our modelling is a relatively conservative estimate as it is underpinned by moderate assumptions about the firm-level cost and number of companies affected.”