27 Aug. 2025: Post-Brexit divergence of UK and EU circular economy rules could expose the UK to substandard products and hurt local businesses, says the Institute for European Environment Policy (IEEP) UK.
Analysis of current legislation, conducted alongside the Aldersgate Group, found a growing gap between the two markets, urging the UK to address this in an upcoming circular economy strategy for England.
Rachel Solomon, executive director of the Aldersgate Group, said that, as other markets make progress, the UK must collaborate to ensure it is not “left behind”.
“It’s critical that the government takes action through the upcoming circular economy strategy to address potential divergence and reward ambition in the private sector,” she said.
The UK government’s circular economy taskforce is currently working to produce a circular economy strategy for publication later this year. It will apply to England, but the commitments are expected to set a precedent for other authorities to consider in future planning. Scotland passed its Circular Economy Act in 2024.
The IEEP and Aldersgate Group argued that the EU’s own proposed circular economy act, which is expected in 2026, will “further widen the gap”.
The analysis finds that high levels of divergence have emerged with regards to buildings, batteries and critical raw materials, citing the EU’s rollout of its Ecodesign for Sustainable Products Regulation as the clearest example.
It noted that UK firms exporting to the EU will have to comply with these ecodesign rules, leaving them vulnerable to competition from producers who only sell to the UK market.
“Without measures to address this situation, ambitious and innovative businesses selling into the EU market will be placed at a disadvantage,” said a statement from the IEEP.
“Conversely, UK consumers would find themselves facing lower-quality products, with less access to repair, reuse and recycling compared to those in Europe.”
The report said the UK has been “diverging by default” after the Brexit withdrawal agreement came into force. However, it noted that plastics and packaging was an area where UK policy had been more progressive, pointing to greater producer responsibility policies and bans on single-use products.
The research also concluded that the UK had “not systematically kept pace” with new EU legislation, warning that the resulting “misalignment of rules can introduce risks, including frictions to trade, hampered economic growth and stymied progress on environmental protection”.
Businesses will aim to avoid the cost of providing different products to different markets, it continued. This meant EU products sold in the UK may have more circular supply chains than required under domestic law. UK-based producers may lack wider policy support to meet EU obligations by comparison, the research stated.
The IEEP and Aldersgate Group recommended a shared vision for a circular economy across the UK nations and attempts to mitigate the effect of policy divergence with the EU.
They suggested the UK follow non-EU countries such as Iceland and Türkiye in joining the European Environment Agency and that current regulatory misalignments be resolved.
With England’s circular economy strategy expected in the autumn, the Fabian Society this month also called for the UK to match the EU’s circular ambitions.