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News
UK drinks industry ‘highly dependent’ on single market
A new report investigating the impact of Brexit on the food and drink sector concluded that “a free trade agreement with the EU should be the number one priority for the government”.
The UK will leave the European Union in March 2019
The report, published by the Business, Energy and Industrial Strategy Committee, notes that the current success of the UK processed food and drink sector has been “highly dependent” on inclusion in the single market, with 60% of UK exports going to EU markets.
On leaving the European Union, the industry, which exported £22 billion worth of goods in 2017, may suffer due to increased tariffs, limited access to labour and higher production costs associated with supply chain delays.
Although the committee found that the UK “may stand to benefit” from growth opportunities outside the EU, it stated that “the sector does not see this as achievable without replicating all existing EU trade deals”.
According to the report, a free trade agreement with the EU could mean “keeping the status quo as far as possible”.
Prime minister Theresa May previously expressed the government’s intention to leave the single market once the UK exits the EU.
Supply chain issues
As well as the implications for imports and exports, the new report analysed the impact a “hard border” may have on production around the UK.
Companies that rely on materials from across Europe in their supply chain, such as Baileys producer Diageo, may suffer through delays at border points as a result of the “additional volume of trade needed to be checked once we leave the customs union”.
The committee found that the additional traffic pressures on border points may “make it more challenging to import fresh products”.
In addition, it said, leaving the EU will limit access to skilled workers from around the EU.
According to the report, it is essential that the food and drink sector can “continue to have immediate access to the skills it needs” and that the government must work with the sector to meet its skills gap and ensure it is an “attractive destination to UK nationals”.
As the deadline for Brexit negotiations draws nearer, the Scotch Whisky Association discussed the impact the departure will have on whisky and the wider drinks industry previously called for protection of trademarks and geographical indications for wines and spirits.