11 
Jul

Brexit Update

Brexit updateAt the time of this Brexit update, there is a great deal of uncertainty about the Brexit deal.

While for the food industry, there is grave concern over the final negotiations and the impact on this sector of industry.

Food and drink is the UK’s largest manufacturing sector. It contributes over £28bn a year to the economy. As a nation, we produce just over half of what we eat and we depend on European imports for 25% of our consumption. These are uncomfortable figures for the government when trying to negotiate a fair deal for everyone.

Divorce Deal

Under the terms of Article 50, a divorce deal has to be reached by the end of March 2019. There is no deadline for a longer-term trade and partnership deal so there are indications that the latter will be thrashed out endlessly.

One of the most important issues for the food industry is that of harmonisation. There are over 4,500 EU regulations regarding farming, food and environmental standards that the Department of Environment, Food and Rural Affairs (Defra) have to deal with.

UK exports currently depend on this sort of harmonisation of rules. These range from the size of tins to the amount of sugar in a jam. The latter was introduced to respond to market trends for less sugary food. It was initiated to bring the UK in line with Europe so it could develop export markets in Europe.

Food Workers

Another major cause for concern is migrant workers. Currently, farmers, food processors and food manufacturers employ 500,000 foreign workers. The government has already made clear its commitment to curb immigration but the food industry recognises that the end of the freedom of movement created by Brexit will lead to the requirement for UK permits and visas. If workers cannot afford these permits, the traditional seasonal workforce is under threat.

Defra, Agriculture and Food Legislation

And then we come to the role of Mr Gove, the new secretary of state at Defra. One of his first tasks is drafting the agriculture bill promised in last week’s Queen’s speech. This bill will take the UK out of the common agricultural policy, which the UK has been part of for the last 40 years.

The bill gives £3 billion subsidies to farmers to keep them sustainable and competitive to compete in globalised commodity markets. However, the problem is the replacement policy as 40% of all European legislation relates to food and agriculture and 80% of all UK food legislation has been negotiated in the EU. Mr Gove has promised better trade deals and cheaper food when Brexit occurs. Only time will tell.

Finally, there is the issue of the European Union’s single market. This is different from the EU.  This is what Norway, Iceland and Liechtenstein belong to. As well as eliminating tariffs, quotas or taxes on trade, it includes the free movement of goods, services, capital and people. It also aims to remove “non-tariff barriers” which include differing rules on packaging, safety and standards.

Whatever happens, there are unchartered waters ahead. The food industry and the catering businesses closely allied to it must be prepared for any changes. So look out for our next Brexit update.

Published Date: 11th July 2017
Category: Blog, News
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