Brexit: The final countdown

Brexit: The final countdown

After what at times has felt like an excruciatingly long wait – two years, nine months and six days, to be precise – we are, I’m sure you are fully aware, finally set to leave the European Union (EU) on 29th March 2019. With the greatest constitutional and political challenge we have faced since the end of World War 2 finally (apparently) imminent, it is high time to return to a subject that, due to OOH being a monthly magazine, since the momentous decision was made to leave, we have largely tried to stay away from in the hope that clarity will emerge at some point (an approach that, some might say, the government has also been adopting).

Brexit, though, is something of a paradox – a subject that has been near the top of pretty much every serious news bulletin since 23rd June 2016, but where little has actually moved on since Theresa May announced the details of her much-maligned withdrawal agreement – backstop front and centre – to the nation on 14th November 2018.

This means that at the time of going to print – 12th March, with the latest Commons vote imminent – we still do not know what will happen in just 17 days’ time. With our exit approaching, though, I felt it would be remiss not to send out an almost slightly apologetic request to a number of industry sources, asking them for any advice that they could offer, or even merely to state their position, for the benefit of our readers.

It was no real surprise, then, when my first port of call, UKHospitality, said they felt unable to comment at this juncture, but that they would be issuing something as soon as possible. With so much remaining unclear, and it being such a divisive issue, I was expecting any replies I did get to be fairly property boundary-perching responses that would put even Jeremy Corbyn to shame – but the Food and Drink Federation (FDF) were happy to put their cards on the table. “Food and drink will be one of the hardest hit sectors by Brexit,” its spokesperson told me. “Whether it is access to future workforce, the shape of the regulatory regime, our trading relationships, or the all-Ireland agri-food supply chain, the long-term future for UK food and drink is dependent on the deal government secures. No-deal would be the worst outcome for our industry and for UK consumers.”

They then went on to tackle one of the other big issues for our industry: the fact that food and drink manufacturing employs 117,000 EU workers, making up almost a third of the workforce. “Their contribution is vital to the success of our industry,” the spokesperson equivocated. “We welcomed the announcement that the government is planning on scrapping the fee associated with the EU Settlement Scheme. Further work is now needed to make sure the right to stay and the Settlement Scheme is swiftly and effectively communicated to eligible EU citizens wishing to stay in the UK and that employers are provided with the tools needed to support their workforce.”

Then there is the fact that 29% of the food consumed in the UK is imported from the EU. The (project?) fear is that a disruption in trade could drive up prices and lead to shortages, particularly of fresh fruit and vegetables. Bidfood has expertise in this area, frequently being cited on the national news as one of the wholesalers that has been stockpiling certain items in anticipation of disruptions. “Over the last few months we have been engaging directly with government departments, EU and UK Customs, as well as consulting with UKHospitality and the Federation of Wholesale Distribution, as part of the extensive work we have been undertaking to prepare for different scenarios, including a no-deal Brexit,” Jim Gouldie, supply chain and technical dervices director for Bidfood, told me.

“As part of this we have written to more than 700 of our core suppliers to understand the plans they are putting in place, and where there might be areas of risk in maintaining availability to customers of our core range products as we leave the EU. We have also assessed all of our core range products that come in from the EU and identified key lines where we would need to build additional contingency stock levels of up to eight weeks, taking into account what suppliers have said about their own plans to hold contingency stocks.”

The wholesaler has identified alternative products for those that it believes are at risk (these weren’t specified), as well as lines that it feels it needs additional stocks of. “As part of this process, we have looked closely at the products that are important to sectors that have a duty of care – for example, education, healthcare and public services,” Gouldie explained. “Following this assessment, we are now in the process of implementing our contingency stock plans and have invested in additional warehousing to house these extra stocks as we approach the end of March.”

From the government side, Michael Gove, the environment secretary – one of the few leading Brexiteers to remain in cabinet and support May’s deal – has been quick to stress that major disruption will be avoided. Speaking at the annual National Farmers Union conference in February, he stated that there will be a more detailed announcement on tariffs “shortly”, but that the government will ensure the farming sector is protected from being put at a competitive disadvantage. He also reiterated his continued support for the prime minister’s deal, particularly highlighting the need for tariff- and quota-free access to the European market (although, if this is anything like his previous ‘support’ for Boris Johnson’s run to be prime minister after David Cameron’s resignation, May probably shouldn’t count her chickens just yet).

Counter-balancing this optimism, though, is the stance of the FDF, who felt that leaving without a deal, and trading solely on World Trade Organization terms (which no other country on the planet does), will result in us losing “preferential access to key partners”. “The EU27 buys more than 70% of UK food and soft drink exports each year,” its spokesperson warned. “Loss of these exports would see many businesses face serious profit and cashflow implications. It would result in the EU applying costly and hugely disruptive checks and inspections at border to UK food and drink exports. The consequence would ultimately be higher prices and less choice for UK consumers, as producers adapt to the UK’s diminished access to near markets.”

Higher prices and less choice would surely be a lose-lose for all (well, most) involved, and it is to be hoped that what has begun to feel at times like an uber-high stakes game of chicken between ourselves and the EU will finally be resolved, with the imminence of the deadline focusing minds and providing some much-needed clarity and stability. By the time of our next issue, when we will be able to return to this topic in more depth, many will be relieved if it has transpired that what for too long has felt like a case of no news will have meant good news all along – not just for the foodservice industry but for the economy as a whole.