Multi-billion pound UK digital economy 'at risk' from Brexit
THE UK's multi-billion pound digital economy is "at risk of isolation" as a result of Brexit unless the government secures a transition agreement avoiding interruptions to the flow of data, businesses have warned.
The warning from the CBI came as ministers acknowledged that any disruption to cross-border data flows as a result of the UK's planned withdrawal from the EU could be "costly" for both Britain and Europe.
The new Government document, published ahead of the third round of formal Brexit talks in Brussels next week, acknowledges uncertainty over the future data relationship between the UK and EU "may force businesses on both sides to incur unnecessary expense and time in contingency planning or put them under pressure to renegotiate what may be less favourable contractual arrangements".
It warns any disruption in cross-border data flows would be "economically costly" to both the EU and UK, and new restrictions on the exchange of information would "harm both economies".
The EU data economy is forecast to be worth £592 billion by 2020, and the CBI says the sector could soon reach a value of £240 billion.
Sharing personal data is also "essential" to the fight against terrorism and serious crime, the Government paper states.
The paper calls for early UK-EU agreement on mutual recognition of data protection frameworks, with an agreed timeline for longer-term arrangements.
And it seeks assurances that flows of data between the UK and non-EU countries with adequacy agreements - such as the US, Canada and New Zealand - can continue on the same basis following Brexit.
The CBI's director of innovation Tom Thackray said that in the short term, a seamless transition deal is necessary to protect the free flow of information and provide legal certainty to businesses and consumers.
"If no transition deal is agreed, the UK's potential £240 billion data economy is at risk of isolation," he said.
TechUK deputy chief executive Antony Walker added: "The free flow of personal data across borders is fundamental to trade, commerce and communication.
"The tech sector, and increasingly every business in the UK that does business internationally, needs a clear legal basis for data transfer post-Brexit."