EU is about harmonization of regulation and free trade of goods, services and workers... They really wanted to lose workers part, but you can't really do that without the rest and not undermine the whole thing. So it was never acceptable from EU point.

Now introducing any level friction of trade quickly moves trade to somewhere else if price is competitive and there is less friction.

The number of laws and regulation have _increased_ in the UK since leaving the EU, not _decreased_.