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The Guardian
5 hours ago
- The Guardian
UK falling behind EU on environmental rules amid post-Brexit rollback
The UK is using Brexit to weaken crucial environmental protections and is falling behind the EU despite Labour's manifesto pledge not to dilute standards, analysis has found. Experts have said ministers are choosing to use Brexit to 'actively go backwards' in some cases, though there are also areas where the UK has improved nature laws such as by banning sand eel fishing. Despite having promised a 'reset' with the EU, Keir Starmer's government has failed to even start closing loopholes in environmental law that have widened since Brexit, and is in some cases choosing to delete EU environmental rules from the statute book. Analysis by the Guardian and the Institute for European Environmental Policy (IEEP) has found the UK is falling behind the EU in terms of protecting rare creatures such as red squirrels, cleaning up the air and water, removing dangerous chemicals from products, and making consumer products more recyclable and energy efficient. Since Brexit, the analysis has found the EU has brought forward 28 new, revised or upgraded pieces of environmental legislation that the UK has not adopted, and the UK has actively chosen to regress by changing four different pieces of legislation including on protected habitats, pesticides and fisheries. Areas of concern include: The planning and infrastructure bill, which overrides the EU's habitats directive and allows developers to pay into a general nature fund rather than keeping or creating new habitat nearby to make up for what is destroyed. The UK falling behind on water policy, with the EU implementing stronger legislation to clean rivers of chemicals and microplastics and making polluters pay to clean up. Air pollution, as the EU is legislating to clean up the air while the UK has removed EU air pollution laws from the statute book. Recycling and the circular economy, as the EU enforces strict new standards for designer goods that could leave the UK as a 'dumping ground' for substandard, hard-to-recycle products. Last year, the Guardian and IEEP found 17 environmental areas in which the UK was falling behind the EU. As the government fails to keep up with EU environmental legislation, the chasm has widened to 28. There are a couple of 'bright spots' identified by IEEP in which the UK has begun to improve its environmental protections compared with the EU, including the ban on sand eel fishing that could stop puffins from starving. The UK has also designated more marine protected areas than the EU, and is making farming payments contingent on protecting areas for nature. However, these are outweighed by the lack of regulation around some of the most important environmental areas, experts said. Of most concern is the decision of the UK government to overrule the EU-derived habitats regulations that protect the habitats of rare creatures including dormice, red squirrels and nightingales. The Office for Environmental Protection has warned that the planning and infrastructure bill, which contains the legislation that would overrule the habitats regulations, is a 'regression' of environmental law. The OEP is the watchdog set up after Brexit to replace EU oversight of the implementation of environmental regulations in the UK. However, although Labour promised in its 2024 manifesto to 'unlock the building of homes … without weakening environmental protections', the government has ignored its recommendations. Michael Nicholson, the head of UK environmental policy at IEEP, said: 'It is one thing deciding not to keep pace with the EU in actively strengthening our environmental laws but quite another to actively go backwards and remove environmental protections that we inherited from our EU membership.' The EU has also been rolling back some of its planned environmental legislation, as politicians globally deprioritise environment and climate action. In the first six months of the new European Commission mandate, the EU delayed a law to stop deforestation in supply chains by one year, gave carmakers two extra years to meet pollution targets and downgraded the protection status of wolves. Environmental NGOs have found themselves in the crosshairs of a funding freeze they argue undermines democracy. After farmers' protests swept across Europe last year, lawmakers and member states nearly killed off a nature restoration law that EU institutions had already negotiated. Nicholson added: 'Five years on from Brexit, we can now see that the UK has chosen not to keep pace with the EU in strengthening its environmental laws and policies. 'The EU is no nirvana for environmental protection, but the UK is falling behind and should be looking to use its post-Brexit independent policymaking powers to go above and beyond what the EU is doing. Sadly, it is losing this race to the top and has ceded leadership to the EU.' In some areas, Northern Ireland has had to implement EU laws under the Windsor framework that keeps the border with the Republic of Ireland, an EU member state, soft. These include the urban wastewater treatment directive, chemicals regulation and pesticide rules. Before the UK left the EU, politicians including the former environment secretary Michael Gove promised the UK would be 'world leading' on the environment, using its newfound freedom to strengthen its regulations. However, the opposite has happened in most cases. Richard Benwell, the chief executive of Wildlife and Countryside Link, said: 'The UK shouldn't just match the EU on environmental standards, it should lead. In many areas where the UK is falling behind – like banning toxic chemicals – aligning with the EU would save time, money and wildlife. In other areas, the government could put a bold UK slant on an EU idea. The polluter pays plans in the urban wastewater treatment directive should go economy-wide. Where we're leading, like nature-friendly farming and banning bottom-trawling, the Department for Environment, Food and Rural Affairs should have Starmer's backing to be braver, to turn the tentative steps forward into a confident plan for a nature-positive economy.' The Green MP Ellie Chowns said: 'The Green party warned that Brexit could see the UK reduce regulations in a race to the bottom. Unfortunately, the election of a Labour government a year ago hasn't prevented that happening. 'Of course, it doesn't have to be like this. We could have clean rivers, breathable air, farmers encouraged to work with nature and consumer products designed to last and be recycled. We could work more closely with our EU neighbours and join the customs union to better align our regulations upwards. And that is what it boils down to – a political choice. The government has made the wrong choices and needs to change direction.'
Reuters
8 hours ago
- Reuters
BoE to cut interest rates just once more this year, held back by resilient inflation, growth
BENGALURU, Aug 19 (Reuters) - The Bank of England will cut interest rates by a quarter-point once more this year and then again in early 2026 as a resilient economy generates persistent inflation, according to most economists in a Reuters poll who have largely not changed their outlook in the past month. Earlier this month the central bank cut Bank Rate by 25 basis points to 4.00% after a rare second round of voting, in a 5-4 split in the Monetary Policy Committee. Governor Andrew Bailey said easing should not happen "too quickly or by too much." An unexpected surge in inflation to 3.6% in June prompted the BoE to lift its forecast for it to peak at 4.0% this quarter. Data due on Wednesday are likely to show inflation, which the BoE targets at 2.0%, rose further in July to 3.7%. But economists in the poll still expect inflation to peak around current levels, suggesting most have not made changes to their forecasts during August, which tends to be a quiet month with many away on summer holidays. Fifty of 62 economists polled August 13-19 said the BoE will cut Bank Rate by 25 basis points once more this year, most likely at the November meeting which coincides with the bank's own forecasting round. Nine expected the central bank to remain on hold. Interest rate futures contracts are pricing in the next rate cut in early 2026. "Right now the Bank of England is really on a knife-edge in terms of whether it wants to cut interest rates further. We think the disinflationary momentum, particularly in the wage data, will be just about enough to tip the MPC into cutting rates in November. I wouldn't be surprised to see continued split votes - two-way votes, three-way votes," said Chris Hare, senior economist at HSBC. "The risk is we do ultimately get 4% inflation, coupled with the risk wage growth doesn't ease back in the way we expect. If we see indicators of inflation expectations being even more uncomfortably elevated than they are... it would increase the risks of the majority of the MPC opting to pause for the time being." Official data showed overall average weekly earnings, excluding bonuses, grew 5% in the three months to June. A rate of 3% is seen as consistent with the BoE's 2% inflation target. Britain's economy has also defied predictions of a slowdown. A surprise 0.3% expansion last quarter put Britain ahead of its G7 peers for the first half of the year. Forecasts suggest steady growth of 1.1% this year and 1.2% in 2026 - a pace broadly similar to last year. "What we're learning about the economy is that it has an underlying degree of resilience that people had not anticipated, and ultimately that feeds into our rates call as well," said Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, who expects the BoE to stay on hold until the end of next year. While a majority of 59 economists predicted another quarter-point cut in early 2026, there was no consensus on the rate path throughout next year, with a split on how many cuts would be delivered. "We think the neutral rate is higher," Jordan-Doak said, referring to the rate that neither stimulates nor restricts the economy. "This means only a couple of rate cuts even in a worst-case scenario." (Other stories from the Reuters global economic poll)
Daily Mail
12 hours ago
- Daily Mail
UK borrowing costs spike as Bank of England rate hold fears
UK borrowing costs spiked yesterday as traders bet that the Bank of England will keep interest rates on hold for the rest of the year in a blow to households and Rachel Reeves. The yield on benchmark ten-year bonds – which rise as prices fall – climbed to more than 4.76 per cent, the highest level since late May. Traders also sold 30-year UK bonds, sending yields above 5.62 per cent and close to levels last seen in April when they soared to their highest since 1998. Rising yields translate into higher borrowing costs for the Government and will pile further pressure on the Chancellor ahead of the Budget. Already facing an estimated £50billion financial black hole, a downturn in the market for UK bonds – known as gilts – make the prospect of tax increases even more certain. U-turns on winter fuel payments and welfare reform have tied Reeves' hands as she tries to repair the public finances. And Simon French, chief economist at broker Panmure Liberum, even suggested yesterday that she 'should resign in dignified protest' if Keir Starmer does not back her efforts in the face of resistance from Labour backbenchers. Markets bet that the Bank of England will not cut interest rates any further this year. Traders yesterday saw a 56 per cent chance that rates would remain at 4 per cent in December. Interest rates have been coming down steadily since last summer, easing pressure on borrowers. But that progress could be halted if – as is increasingly feared – inflation worsens. A report yesterday from financial firm S&P Global showed the latest rate cut boosted consumer sentiment – implying that a pause in cuts will have a damaging impact. It gave a reading of 47 for August, up from 45.1 in July and the highest level since October's Budget. A reading below 50 shows deterioration and above 50 shows improvement. That suggests that while household sentiment remains negative – after Reeves' tax-raising Budget and Trump's trade war – the tide has at least briefly been halted. S&P said the poll of 1,500 households came 'hot on the heels' of the Bank's decision to cut rates to 4 per cent earlier this month. Maryam Baluch, an economist at S&P, said the reading was 'a telling sign that the easing of monetary policy has been received positively by households across the country'. Figures tomorrow are expected to show inflation climbing to 3.7 per cent from 3.6 per cent the month before. The Bank of England predicts it will hit 4 per cent later this year. That will add to cost of living pressures on households as well as making it harder for the Bank to cut rates further. Recent official figures showed economic growth slowing sharply and debt ballooning while unemployment has risen by more than 200,000 since Labour came to power. The dismal picture has underlined serious worries about Reeves' handling of the economy. Bond markets have turned volatile on a number of occasions over the past year as traders question her ability to bring public finances under control. Global events have also had an impact, with US inflation fears last week sending bond yields higher across the world.
