Brexit would be ‘anathema’ to spirits investment

If the UK public votes to exit the European Union, investment across the entire EU spirits sector would come under threat, the director general of Spirits Europe has warned.

Brexit would be “anathema to businesses looking to invest” in spirits, Spirits Europe’s director general has argued

Speaking to The Spirits Business ahead of the UK’s referendum on its membership in the EU this month, Paul Skehan, director general of trade body Spirits Europe, said an ‘out’ vote would be “anathema to businesses looking to invest” in the industry.

“The threat itself is not exactly a vague threat, but it’s an undefined threat,” he said. “Pushing money into new plans, new stills, new barrels – no-one is going to do that if they feel their market for the next few years is relatively unpredictable.”

Furthermore, Skehan believes one of the most worrying aspects of a potential ‘out’ vote for the spirits sector is the precedent it could set for other EU countries.

“If there’s a remain vote, I hope that’s sufficiently comprehensive that it won’t encourage other EU countries to hold referendums,” he added.

“Because in any business community, you are looking for confidence and consistency in a set of conditions prevailing. That’s the basis on which investments are made.”

According to Eurostat figures cited by Spirits Europe, there was a cumulative spirits trade flow of just under €3 billion between the UK and EU in 2015. The organisation said this trade would be “threatened” in the wake of a Brexit.

Skehan said that there is “no appetite” within the industry to create contingency strategies due to “reserved optimism” for an ‘in’ vote.

Similarly, David Frost, chief executive of the Scotch Whisky Association (SWA), said his organisation has not discussed contingency plans should the UK leave the European Union.

Speaking to The Spirits Business, he said: “We are not actively looking at how Scotch whisky regulations could be implemented at UK level because we will wait and see what the result is.

“It is would be a formidable task is all one can really be sure of. A ‘leave’ vote would create massive uncertainty in almost every aspect of British economic life.”

The heads of Diageo and Chivas Brothers are among the business leaders who have called for the UK to remain in the EU, signing an open letter earlier this year claiming that a Brexit would “deter investment, threaten jobs and put the economy at risk”.

For an in-depth look at the upcoming referendum’s potential affect on spirits, see the June 2016 issue of The Spirits Business magazine, out now.