The first draft of the revised Data Protection Directive due to be released by the European Commission in January is expected to propose a pan-European Regulation that would legally oblige all member states to enforce it in the same way.
The current system allows individual nations to interpret the law as they see fit as long as they achieve the broad aims of the Directive.
However, making it a Regulation would take this right away, effectively forcing watchdogs like the UK's Information Commissioner's Office to apply European laws rather than those of the UK government.
Carl-Christian Buhr, a member of the cabinet of Digital Agenda commissioner Neelie Kroes, hinted strongly at an event hosted by law firm Field Fisher Waterhouse on Tuesday that the EC is planning to make this change.
"The Data Protection Directive is under review and January's proposals for a new legal framework may not be a Directive but a Regulation that's applicable in law," he said.
Furthermore, a member of the Article 29 Working Party, which advises the EC on data protection issues, told V3 that there is a "possibility" that it will look to create a Regulation.
Regulators will make such a move to achieve a single data protection law for citizens across the EU, but legal experts warned that it could seriously harm the UK economy.
Stewart Room, a partner at Field Fisher Waterhouse, explained that many companies outside Europe see the UK as the best place to access and process data as it has one of Europe's more liberal data protection regimes, but this advantage will be lost under the proposed changes.
"The creation of a Data Protection Regulation will end the Data Protection Act and put off many US companies from entering the UK," he said.
"There's no doubting the sincerity of the law makers, and that they are trying to protect citizens, but they're going too far with what they're set to propose and it will have a detrimental effect on innovation at a time when the economy needs all the help it can get."
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