European Commission data protection plans are the biggest threat currently facing the UK economy, a senior Downing Street figure said this week.

Rohan Silva, the senior policy adviser behind the government’s Tech City initiative, described the draft European data protection plan as ‘a completely demented set of regulations’.

The new regulation, designed to update and harmonise data protection regulations, includes a ‘right to be forgotten’ on the internet. Aimed mainly at social media sites such as Facebook, it proposes fines of up to 2% of global turnover for companies that refuse to comply with requests to erase customers’ personal details.

The UK government says this would threaten the growth of the knowledge economy and is lobbying for flexibility in implementing the rule.

However, in a letter to justice secretary Chris Grayling in March, Viviane Reding, the EU justice commissioner, said she was ‘surprised to learn that it would be the intention of the UK to introduce a new layer of complexity, cost and risk of non-compliance’.

Ireland, which currently holds the presidency of the EU, has made enacting the new regulation a priority for its term.

Silva was speaking at an event to launch an independent review of the use of ‘public sector information’ to boost the economy.

The review, by Stephan Shakespeare, chair of the government’s Data Strategy Board, calls for a new approach to privacy and data protection, saying current expectations that data can be secured are ‘unrealistic’.

The review proposes stiffer penalties, including prison terms, for deliberate and harmful misuses of data.