There are a number of different fire safety standards that might apply in this case.
Unfortunately, there is no single flammability standard for upholstery or vertical surface fabrics which has been adopted as
the norm throughout the world and the plethora of different
standards in force internationally reflects the different ways
of approaching the whole flammability issue. A single standard
has been brought in which is acceptable throughout the European
Union, EN 1021 : 1994, but this only covers cigarette and
match tests - nothing more rigorous - and other national
tests continue to proliferate.
The flag probably falls under something like curtains, wall hangings and similar vertically hanging fabrics.
For example Europe have harmonised cigarette (EN 1021-1) and match (EN
1021-2) resistance Standards which should be understood by all
members. However, there are no such Standards for higher sources of
ignition. Plus use of these Standards is mostly voluntary, dependent
on whether the country in question calls them up in National
Regulations. As can be seen from the UK, any fire safety controls may
or may not use the European Standards, but may use Standards with
certain modifications embedded in National Regulations
From what I can find it looks like while minimum european fire safety standards would have applied to the flag, British standards would also have applied. (BS 5867)
Readers may also be interested in the following European standards
that are applicable to curtains and drapes:
BS EN 13772:2011 – ‘Textiles and textile products – Burning behaviour – Curtains and drapes – Measurement of flame spread of
vertically oriented specimens with large ignition source’
BS EN 13773:2003 – ‘Textiles and textile products – Burning behaviour – Curtains and drapes – Classification scheme’
BS EN 1101:1996 – ‘Textiles and textile products – Burning behaviour – Curtains and drapes – Detailed procedure to determine the
ignitability of vertically oriented specimens (small flame)’
BS EN 1102:1996 – ‘Textiles and textile products – Burning behaviour – Curtains and drapes – Detailed procedure to determine the
flame spread of vertically oriented specimens’.
So we can't say for certain that it's european regulations which led to the flag failing to burn. It could also have been British ones. On the other hand the british regulations are partly harmonized with the rest of the EU.