The costs of diverging from European Union rules after Brexit "vastly outweigh" the benefits, the CBI has warned.

The employers' group said the EU's single market "is one of the most sophisticated systems of economic rules in existence" and warned "the job of untangling 40 years of economic and regulatory integration is a mammoth one and should not be underestimated".

"The stakes are high," it said in its report. "If negotiators get it wrong on rules, the consequences will be far-reaching."

The CBI, which represents 190,000 firms, consulted hundreds of businesses of all sizes - from architectural firms to zoos - to compile what it described as "an unparalleled evidence base" as Britain embarks on the colossal task of severing ties with Brussels.

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Firms voiced concerns about court action, entire business models becoming illegal overnight, customer contracts being left in confusion, and a sudden drop off in access to the UK's closest market for some of the nation's leading industries.


The CBI said businesses did not want a "bonfire of regulation" and accepted there are opportunites to change and improve rules.

But these are limited and are "vastly outweighed by the costs that will be incurred if the UK's rules change so much that it reduces smooth access to the EU's market", it added.

Carolyn Fairbairn, CBI director general, said: "It's vitally important that negotiators understand the complexity of rules and the effects that even the smallest of changes can have.

"Deviation from rules in one sector will have a knock-on effect on businesses in others, and divergence from rules in one part of a production process will have consequences for market access throughout entire supply chains.

Image: Brexit Secretary David Davis and the EU's chief negotiator Michel Barnier

"It's hard to overstate the importance of the decisions that will be taken over the next six months.

"Put simply, for the majority of businesses, diverging from EU rules and regulations will make them less globally competitive, and so should only be done where the evidence is clear that the benefits outweigh the costs."

A spokesman for the Government said: "We want the broadest and deepest possible partnership - covering more sectors and co-operating more fully than any Free Trade Agreement anywhere in the world today.

"And - as the Secretary of State for Exiting the European Union has said - this is a race to the top on global standards, not a race to the bottom."

Also responding to the report, Richard Tice, co-chair of Leave Means Leave, said: "This report from the CBI protects the vested interests of global multi-nationals at the expense of the approximately 90% of the UK economy that does not export to the EU.

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"It is quite extraordinary that this business lobby group wants to keep a load of unnecessary EU regulations that stifle growth and innovation, which will thus reduce wage growth potential for UK workers."

In a separate report, the British Chambers of Commerce called on the Government to set up a formal dialogue with business groups on future trade deals.

Director general Adam Marshall said: "The world's most successful trading countries have formal structures to tap into business expertise ahead of and during major trade negotiations."

In February, the boss of Britain's maritime sector said liaising with the Government over Brexit was like "banging your head against a brick wall".

David Dingle, the chairman of industry body Maritime UK, insisted his industry was "shouting loudly" about their concerns, but suggested there had been little response from ministers.