“A no-deal exit from the EU would be disastrous for the UK’s food and drink industry,” FDF chief operating officer Tim Rycroft stressed yesterday.
“Within weeks it is likely that shoppers would notice significant and adverse changes to the products available and random, selective shortages. Limited shelf life products would face the most immediate risk.”
The UK is due to leave the EU on 31 October. Proponents of Brexit stress that the ‘default’ legal position will be to leave without an agreement on terms if changes to the deal currently on the table cannot be renegotiated in time.
The prospect of no-deal has led to bitter in-fighting in the governing Conservative Party and across Parliamentary lines. Boris Johnson, currently front-runner to replace Theresa May as the next Conservative leader and Prime Minister, has refused to rule out the option of proroguing or effectively shutting down Parliament to force a no-deal, which is opposed by the majority of MPs.
A ‘fundamental risk’ to food makers
In its latest report, the Parliamentary Committee on Exiting the EU warned yesterday that no-deal Brexit would lead to ‘severe disruption’ and pose a ‘fundamental risk’ to the competitiveness of ‘key sectors’, including retail, food and drink.
The Government’s own economic assessment shows that a no-deal exit from the EU would be the most economically damaging outcome for the UK, the Committee stressed. Meanwhile, the independent Office for Budget Responsibility has suggested a no-deal Brexit would result in a £30bn hit to public finances, pushing the country into recession.
If it leaves without a withdrawal agreement, the country could be left trading with the bloc on World Trade Organization rules. The UK would also crash out of the 40 trade deals it currently accesses through EU agreements, according to the Confederation of British Industry.
The Committee poured cold water on the suggestion – backed by Johnson - that the UK could rely on Article XXIV of the WTO’s General Agreement on Tariffs and Trade (GATT) to maintain current tariff-free trade arrangements with the EU.
“A no-deal Brexit, with no GATT XXIV agreement, would be at best a foolhardy gamble and at worst, lead to severe disruption, and it is neither desirable nor sustainable as an end state for our economic relations with the EU. This clear evidence reinforces our previous conclusion that a ‘managed no deal’ cannot constitute the policy of any responsible Government,” Committee chair and Labour MP Hilary Benn concluded.
Benn noted that a no-deal Brexit would be detrimental to both availability of food and the economic viability of the UK’s farming sector. “No deal would lead to problems with some food supplies and, we were told, would be ‘disastrous’ for UK farming.”
Rycroft also stressed the significant negative consequences that no-deal would have on the economic viability of UK food and drink manufacturers.
“Our industry employs 450,000 people and has a turnover of £104bn. Analysis released earlier this week by the UK Trade Policy Observatory found that no-deal would destroy £18.5bn of UK food and drink manufacturing, with grave consequences for UK consumers.”
Limited stockpiling capacity will result in empty shelves
Currently, the UK imports 30% of the food it eats from Europe alone. The FDF has stressed that leaving the European Union without a transition period will therefore result in higher food prices and empty shelves.
Food shortages, Rycroft continued, will be exasperated by the lack of infrastructure to support further stock piling.
“The run up to 31 October 2019 is particularly stark. Food and drink manufacturers will not be able to secure additional frozen and chilled warehousing space or logistics capacity for stockpiling, as the required space is already booked for the peak Christmas production period. Manufacturers will therefore have no spare production capacity or ability to store ingredients and finished products.
“UK food imports will climb from autumn onwards as fresh food stocks decline, so any ‘no-deal’ disruption will have a major impact on availability.”