UK firms are likely to be deterred from trading in Europe because of a prohibitive new EU trade law, the Confederation of British Industry (CBI) has warned.
Under the new consumer contract legislation, known as Rome I, a European firm unhappy with a product or service provided by a British company will be able to sue the UK firm under its own country's laws.
The commensurate risk and uncertainty this confronts businesses with could help lower British economic integration with the European economy, CBI deputy director-general John Cridland has warned.
"Businesses will have three choices: spend time and money getting to grips with the varied and conflicting legal regimes of each member state they trade with; chance their arm that their processes will meet the required standards; or, most worryingly, stop trading with some countries altogether," he said.
The proposals on applicable law, due to be debated by the European parliament later today, will force companies to comply with all 27 EU states. The British Retail Consortium (BRC) fears this will impact negatively on European internet sales.
"If the law is passed in its current form internet sales across European borders would, at best, be seriously stifled and, at worst, killed off completely, especially for smaller businesses," BRC Brussels director Alisadair Gray commented.
"This would damage both retail entrepreneurs looking to expand and consumers, who have benefited from the increased choice and competition that free and open internet trade has brought so far."
EU politicians backing the legislation have argued that the proposed laws are merely extensions of existing regulations.
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