Brexit breathing space: Short delay gives industry more time but is it merely a stay of execution?

22 Mar 2019 --- While the food industry may technically have that little bit more time for Brexit preparations following last night’s events, confusion still remains over exactly what will happen next. EU agri-food chain players continue to underscore the need for certainty.

As ever, industry representatives have been watching closely this week as May battles on to find a way out of this political impasse, requesting that EU27 allow a Brexit delay. After in-depth talks in Brussels, EU leaders finally came to a conclusion last late night, albeit with two different scenarios, that equal a delay. 

Last night it became official that Brexit will no longer happen on March 29, as initially thought, as EU leaders agreed to push back the deadline by extending Article 50. As the complicated Brexit process continues to play out, a possible delay to May 22 is on the table, but only in the unlikely event that UK MPs back Prime Minister Theresa May’s Withdrawal Agreement in the House of Commons (HoC) next week. If it gets rejected for the third time, the Brexit cliff-edge will then become April 12. At this time, the UK must either leave without a deal or set out its next steps.

The pathway to the UK leaving the EU looks more muddled than ever as perplexed food and beverage sectors continue to face the challenges of a potential no-deal and watch on in disbelief, once again repeating their calls for clarity. 

European farmers' group Copa Cogeca, European Liaison Committee for Agricultural and Agri-Food Trade (CELCAA) and FoodDrinkEurope emphasize how the agri-food sector would be one of the sectors most impacted by a no-deal Brexit. This is due to its complex and highly integrated supply chains, its just-in-time processing and its dependence on perishable products.

“It will ultimately be consumers in both the UK and the EU27 however, that will bear the brunt of Brexit, with disruption in access to the food they enjoy and, in some cases, that they need,” says a joint statement. 

“The current context of uncertainty is very prejudicial to the EU and UK agri-food sectors. The extension of Article 50 beyond March 29 could help the sector to prepare better for Brexit.”

The EU agri-food chain reiterates that the Withdrawal Agreement and the Political Declaration on the future relationship, as negotiated, represent the best way forward. The group urges both sides to agree rapidly on the future EU-UK relationship and thereby provide clarity and certainty for businesses.

The British Retail Consortium also says that Britain is “standing on a knife edge” and “Parliament must put an end to this uncertainty.”

Ian Wright, CEO of the Food and Drink Federation (FDF) also spoke to FoodIngredientsFirst at the International Food & Drink Event (IFE) show in London, recently. “While there will be some opportunities that can be taken in the event of Brexit, the ingredients sector could be particularly hard hit,” he notes.

“In the second scenario, that is, if the Withdrawal Agreement is not approved by the House of Commons next week, the European Council agrees to an extension until April 12, while expecting the UK to indicate a way forward. What this means in practice is that, until that date, all options will remain open, and the cliff-edge date will be delayed,” says a statement from Donald Tusk, President of the European Council.

Moreover, the UK Government will still have a choice of a deal, no-deal, a long extension or revoking Article 50. The April 12 is a key date in terms of the UK deciding whether to hold European Parliament elections. If it has not decided to do so by then, the option of a long extension will automatically become impossible. 

Confidence remains low that May can pass the Withdrawal Agreement in the HoC next week, however. 

Constitutional curveball
Throwing the Brexit curveball into further complications, HoC speaker John Bercow this week cited a convention that dates back to 1604 to block May’s Withdrawal Agreement from a third vote in UK Parliament unless the deal is significantly different from the last previous two votes which massively rejected the deal. 

How this will play out remains to be seen.

Heading into next week, May must first be allowed a third vote in HoC, MPs could then vote again – MPs voted by 391 to 242 votes to reject May's deal last week and in January, when it was massively voted down by MPs in a historic defeat that saw May facing a further vote of no confidence which she later won.

By Gaynor Selby