British companies who are trading with the European Union after Brexit will have to adhere to strict rules that the EU imposes on anyone taking data from consumers in the bloc.
However, Europe has said that London tolerates more intrusion by security agencies compared to countries such as Germany.
This might result in Britain facing demands for even tighter rules for handling EU citizens' data, experts have warned.
V serious interview w Lord Condon on @BBCr4today — both on dangers of policing cuts & risk of losing data access due Gov approach to Brexit— Yvette Cooper (@YvetteCooperMP) 18 July 2017
On Tuesday, July 18, a parliamentary committee said Britain could be put at a competitive disadvantage and the police may even lose access to intelligence, if the government fails to retain data on citizens within the EU.
Michael Jay, chairman of the House of Lords EU Home Affairs sub-Committee, said the volume of data stored electronically and moving across borders had grown hugely over the last 20 years.
"The maintenance of unhindered data flows is therefore crucial, both for business and for effective police cooperation" Mr. Jay said.
"The Committee was concerned by the lack of detail on how the government plans to maintain unhindered data flows post-Brexit," he added.
Ministers believe that the government should ensure there are transitional arrangements, so that data can be transferred once Britain leaves the EU.
This message comes after former Metropolitan Police Commissioner Lord Condon, said that British citizens will be less safe if ministers fail to retain access to "mission critical" European intelligence services after Brexit.
Lord Condon said that losing access to the cross-border flow of data after Brexit will severely impact the ability of the police to deal with terrorism, serious crime, drug dealing and people smuggling.
Ministers and experts have warned access to intelligence sharing through the Europol law enforcement agency, and to the Schengen information system, which holds a 8,000-name watch list of suspected terror suspects, is at risk.
"The government is saying it wants to be part of the data sharing but no guarantees have been made, there is a real risk we will not be part of it at the end of 2019, and we are asking the PM to give us some answers. This data sharing is not a luxury, it is critical," Lord Condon said.