Brexit extension leaves UK industry tense over “wasted preparations”

29 Oct 2019 --- For a third time, the EU has signed off on an extension of the Brexit deadline, leaving UK industry representatives simmering over “wasted preparations.” Contingency planning for an indefinite outcome has cost British businesses “hundreds of millions,” siphoned from core business operations. The Brexit “flextension” allows the UK government to leave the bloc at any given point in time until January 31, 2020, although it remains unclear on precisely what the next move will be.

“Now the EU has lifted the threat of a ghoulish Halloween no-deal exit, food and drink manufacturers will feel a brief sense of relief. However, there remains an underlying sense of frustration and anger too at costly, wasted preparations,” says UK Food and Drink Federation (FDF) Chief Executive, Ian Wright.

In contingency planning for a potential no-deal Brexit, the FDF held regular discussions with UK Department for Environment, Food and Rural Affairs (Defra) in the lead up to the previous Brexit date of October 31.

“The UK has thrice required an extension to avoid a chaotic no-deal Brexit. While we have been clear that a no-deal Brexit would be disruptive for both consumers and retailers, each repeating cycle of parliamentary impasse and extension is costing retailers hundreds of millions that would be better spent improving customer experience and reducing prices,” says Helen Dickinson, Chief Executive of the British Retail Consortium.

“The UK cannot teeter on the edge of Brexit indefinitely. Brexit uncertainty continues to take its toll on retail businesses and the three millions retail jobs that exist today. This extension does not offer time for complacency and it is essential that Parliament commits to resolving Brexit once and for all,” she asserts.

“The timescale ahead is challenging. It is critical that we do not find ourselves, in January, once again facing the precipice, having spent millions of pounds preparing for a no-deal exit three times in the last 12 months,” concludes Wright.

Brexit weighs heavy on consumer sentiments in the UK, impacting businesses.UK stockpiling sees record spike
Coca-Cola CEO James Quincey has since underscored the significant weight shouldered by the UK food and beverage sector leading up to Brexit. “It would be fair to say that in the short term, the UK business has been impacted by the consumer sentiment, driven by Brexit in the UK, which has affected everyone – the entire business outlook in the UK,” he outlines in a recent earnings call.

Quincey points to the potential improvement in consumer sentiment should the UK manage to achieve a Brexit deal with the EU. “If it mercifully comes to an end, then yes, I do think that sentiment will improve, maybe not overnight, but over time and hopefully going into 2020,” he highlights.

Coca-Cola, alongside many businesses, has committed to extending its inventory in preparations for Brexit. UK bakery chain Greggs is bracing for Brexit impact by stockpiling essential ingredients, such as bacon and tuna.

“We are preparing for the potential impact of the UK's departure from the EU by building stocks of key ingredients [and light manufacturing equipment] that could be affected by disruption to the flow of goods into the UK,” says a statement.

Ahead of the festive season, The British Meat Processors Association (BMPA) has asserted that the UK may experience a shortage of traditional Christmas dishes, including pigs in blankets, a staple dish on the Christmas dinner table.

The representatives of the British meat processing industry have warned that the UK is not attracting enough EU workers, which may pose a negative impact on the availability of festive foods, including hand-wrapped cocktail sausages that are “fiddly and hard to mechanize.”

EU industry rallies for free trade agreementThe EU agri-food chain has openly endorsed a Free Trade Agreement with the UK.
Meanwhile, the EU agri-food chain – which involves organizations such Copa-Cogeca, CELCAA and FoodDrinkEurope – has openly endorsed a Brexit deal that includes a Free Trade Agreement (FTA) with zero tariffs and quantitative restrictions between the EU and the UK.

Together, the organizations have previously backed UK Prime Minister Boris Johnson’s revised Political Declaration and have repeatedly said that a hard Brexit would be detrimental for EU and UK farmers, food and drink manufacturers, traders in agri-food commodities as well as consumers.

“Everything must be done to prevent the UK from leaving the EU without an agreement,” the organizations assert in a joint statement.

The organizations also point out that in 2017, EU27 agri-food exports to the UK amounted to €41 billion (US$45 billion) while UK exports to the EU reached €17 billion (US$19 billion). This trade, and the businesses behind it, employ 44 million people across the EU member states, reflecting the degree of integration and complexity of the food supply chain.

“Despite the welcomed commitment to maintaining customs and regulatory convergence in future, we will not be able to replicate the advantages of the EU Customs Union and Single Market through an FTA. However, we hope to find a solution that is as close as possible to the current customs and regulatory agreement,” the agri-food associations affirm.

“On behalf of the European agri-food chain, we will continue to promote a comprehensive and deep FTA between the EU and UK, following the UK’s departure from the EU,” conclude the organizations.

By Benjamin Ferrer