Britain has retreated on its plan for a post-Brexit rival to the EU’s “CE” product quality mark after business leaders warned ministers it was tying up manufacturers in red tape.

The “indefinite” postponement of a copycat “UKCA” safety mark for manufactured goods was welcomed by industry after more than two years of lobbying to abandon the new rules.

The government said that businesses selling electronic, industrial and consumer products into the British market would now be free to use either the UKCA or the CE marks to demonstrate their goods conformed to industrial standards.

Kevin Hollinrake, business minister, added that the decision was taken to reduce “red tape” and to “prevent a cliff-edge moment” ahead of the planned introduction of UKCA from the start of 2025.

“By extending CE marking use across the UK, firms can focus their time and money on creating jobs and growing the economy,” he said.

But, in a sign of the uncertainty still affecting post-Brexit rules, two sectors — construction products and medical devices — were not covered by the announcement and will still have to use the bespoke UK quality assurance system.

Ministers had long portrayed the British safety mark as a way in which the country could “take back control of our product regulations” in the wake of Brexit, but it has been rejected by industry as a costly distraction. Many companies have spent large amounts of money preparing for the new system.

The British Chambers of Commerce said business would “breathe a sigh of relief” at the move and urged the government to go further to reduce regulatory gaps with the EU.

The decision is also the latest signal that Rishi Sunak’s government is accepting the limitations of post-Brexit divergence.

Kemi Badenoch, business secretary, decided to largely abandon the UKCA mark as part of her drive to simplify the post-Brexit business landscape.

“Kemi listened to business and basically said that this had gone on long enough and we had to sort it out,” said one ally. By contrast, many Brexiters had long insisted that divergence from EU laws and standards would lead to a productivity boost in the UK economy.

Badenoch, who backed Brexit, also infuriated Eurosceptic Tory MPs this year by abandoning the government’s contentious plan to review or scrap all EU-era law by the end of 2023.

David Henig, a former official at the UK Department for International Trade now at the European Centre for International Political Economy think-tank, said the decision on the UKCA mark reflected the UK’s difficulty in establishing a rival regulatory system.

“For smaller markets as the UK is now, compared to the regulatory superpower of the EU, these are the difficult choices that have to be made,” he added.

Business groups have repeatedly warned the government that the copycat UK quality assurance mark was creating unnecessary burdens for industry by creating dual EU and UK certification regimes.

The Construction Products Association added that the decision not to include their sector in this week’s postponement would create further uncertainty for the UK building industry and projects including schools, hospitals and housing. “We fear that policymakers do not fully understand or appreciate the gravity of this policy position,” it said.

The British Healthcare Trades Association also called for “urgent clarification” on the outlook for its sector, for which the UKCA system will be postponed until 2028-30.

“While this extension provides welcome relief to companies across the UK, medical device suppliers continue to wait for clear and effective guidance,” it said.

The introduction of the UKCA mark had been delayed on three previous occasions since the EU-UK Trade and Cooperation Agreement came into force in January 2021, angering businesses that had invested time and money in preparing for the scheme.

The plans to introduce the UKCA also exposed a lack of capacity in the UK certification industry to carry out tests on safety-critical products, such as passenger lifts and car airbags.

Stephen Phipson, the chief executive of Make UK, the manufacturers’ lobby group, welcomed the postponement as “a pragmatic and common sense decision” that would “safeguard the competitiveness” of UK manufacturers and help attract investment.

Hilary Benn, former chair of the now-dissolved Brexit select committee, added: “Ministers should now follow this rationale in other areas and ensure that the UK aligns with the standards of our largest market unless there is a clear benefit in divergence.”

Sam Lowe, trade expert at consultancy Flint Global, said the government had bowed to the inevitable with its decision that implicitly recognised the difficulties many companies had faced adapting to a new UK-only scheme. 

“However, given this was always the likely outcome, it is understandable that some companies that have sunk money into adaptation will be slightly aggrieved,” he said.