Written by Clare Ferguson with Olga Dunderberg.
Set up following the entry into force of the European Union-United Kingdom Trade and Cooperation Agreement (TCA), the EU-UK Parliamentary Partnership Assembly (PPA) meets regularly to discuss topics of mutual interest. Some 35 Members from each of the European Parliament and the UK Parliament meet twice yearly, with the next meeting set for 17–18 March 2025 in Brussels. Four main points for discussion feature on the agenda: artificial intelligence (AI), financial services, data adequacy and climate and energy policy.
Artificial intelligence
As active shapers of the development and use of artificial intelligence (AI), changes in approaches to AI are a topical issue for both the EU and UK. Both countries have initiated plans to boost the use of AI technologies. The current UK government plans to regulate only the most powerful AI models while aiming to increase its share of the world’s top AI researchers and train additional AI professionals through an ‘AI Opportunities Action Plan’. The EU also seeks to increase the uptake of AI and initiatives that facilitate the development of AI, with the European Commission issuing an AI continent action plan. However, differences are evident between the EU and UK’s broad frameworks on AI, with the EU adopting a comprehensive risk-based regulatory framework while the UK has a more ‘light-touch regulatory approach’.
Both the EU and UK have also shifted focus on AI use, but in different ways. Concentrating on risks related to bias and discrimination in the useof AI, the UK’s recent emphasis on AI security mirrors the United States’ focus on the security implications of AI. While the EU maintains the importance of ensuring AI systems are safe, it has also shifted focus to supporting AI innovation by increasing investment in AI. Despite the recent developments and plans, the EU and UK are both behind on their goals related to business use of AI. The US also remains ahead of both the EU and the UK when it comes to attracting and retaining AI talent.
Financial services
A central topic in recent financial regulatory dialogues between the EU and UK, the EU and UK have agreed to continue cooperating with the wider international community in developing a shared understanding of the risks and benefits of AI in financial services. Since 2023, three financial regulatory dialogues between the EU and the UK have taken place, emphasising ‘macroeconomic developments, banking and anti-money-laundering, capital markets, and digital and sustainable finance’. Past dialogues have also underlined the importance of ensuring interoperable standards.
Part of the Joint EU-UK Financial Regulatory Forum, which underlines dialogue and cooperation in financial services, dialogue aims to monitor regulatory development and potential spill-over effects; converge towards international standards and their implementation; and ensure the mutual recognition of standards. Following the Joint Declaration on Financial Services Regulatory Cooperation between the EU and UK, agreed alongside the TCA, the regulatory forum falls under the framework established by the subsequent Memorandum of Understanding. Voluntary regulatory cooperation in financial services is a central aspect of the framework.
The context for regulatory cooperation in financial services between the EU and UK could be shifting, however. The UK’s commitment to a reset in relations with the EU may bring about changes which could affect areas such as market access and equivalence, mobility, and regulatory relations deepening current cooperation, which experts consider rather limited.
Data protection
The EU’s General Data Protection Regulation (GDPR) sets specific requirements for transferring personal data from the EU/European Economic Area (EEA) to a non-EU/EEA country, such as the UK. As the current European Commission decision on the ‘essentially equivalent’ level of the UK’s data protection is set to expire in June 2025, continued exchange of data between the EU and the UK requires a new adequacy decision. In light of concern that changes to the data regime in the UK could jeopardise the continuation of the decision, the level of UK data protection is likely to be a subject of EU-UK discussion. A sound adequacy decision reduces administrative burden for companies, and enables convenient and cost-effective transfer of personal data. If the adequacy decision expires,data transfers from the EU to the UK will become more complex and costly. Several changes to UK legislation raise concern that data in the UK is now likely to be subject to automated decision-making, reduced transparency and accountability of how personal data is shared and accessed.
Energy and climate
The TCA also covers energy and climate relations. However, provisions on energy cooperation will expire in June 2026 unless there is a joint decision to renew them. The EU and the UK are both seeking to mitigate the impact of Russia’s invasion of Ukraine, by increasing their share of renewable energies and diversifying fossil fuel suppliers. This has resulted in increased coordination and cooperation, despite some divergence. While the TCA contains fewer provisions on climate action compared to energy, several avenues for renewed and deepened cooperation on climate mitigation are possible. The EU and UK have both established carbon border adjustment mechanisms (CBAMs) in line with Paris Agreement targets, but it is feared that differences between the regimes could create trade friction. Nevertheless, despite not having achieved many tangible results so far, the discussions are likely to intensify and the TCA provides ample possibilities for meaningful cooperation in areas such as emission trading systems.
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