Brexit Food Industry Fears Compounded After Gloomy UK Chancellor Statement
24 Nov 2016 --- The UK food and drinks sector has reiterated its call for a “new industrial strategy” to help access “essential raw ingredients” following the government's Autumn Statement, which received a mixed response from the food and farming industries.
While chancellor Philip Hammond was criticized in some quarters for a gloomy outlook, after he disclosed Office for Budget Responsibility (OBR) forecasts the government would have to borrow and extra £122m ($152m) compared to a previous forecast in March, the government was praised by FDF chief executive Ian Wright for its pledge to stimulate trade growth.
In particular, Wright singled out its decision to direct more funds towards export finance capacity in an effort to make it easier for British businesses to export.
This will mean that the UK Export Finance (UKEF) will have its budget doubled, helping food and drink businesses tap into finance to help them expand overseas.
The majority of UK exports have seen overseas business soar since Britain’s decision to leave the European Union saw the pound significantly weaken and the chancellor is hoping that by pumping more money into UKEF the trade deficit will reduce.
Wright said: “Doubling of export finance capacity to support trade is welcome. We will work with UK Export Finance (UKEF) to boost awareness among food and drink exporters of the products and services they provide.”
“For food and drink producers, it's the on-the-ground support such as mentoring and increased UK presence at internationals trade shows which can result in the greatest gains.”
The government's Autumn Statement followed just days after the FDF revealed that British food exports to countries outside the EU grew twice as fast as those within the EU.
In the three months to the end of September, exports of food and non-alcoholic drinks to non-EU countries grew by 19.2 percent against a rise of 9.6 percent to the EU, compared to the same quarter last year.
The uplift was led by rises in wheat, salmon, cheese, chocolate and will be welcomed by Brexiters who are championing the trade possibilities outside the EU.
Wright added: “Food and drink manufacturing is strategically important to the UK economy and in ensuring future food security. Worth £21.9 billion ($27.25bn), employing around 400,000 people, and feeding millions every day, UK food and drink manufacturers have been a beacon of productivity and export growth, as this week's exceptional figures showed.”
While the FDF broadly welcomed the chancellor's pledge to invest £23bn ($28.6bn) in innovation and infrastructure over five years to stimulate productivity, Wright said there is a “massive untapped opportunity for UK businesses”.
Wright reiterated his call for a “new industrial strategy” in the post-Brexit world, to ensure that the food and drinks industry can sustain its workforce, access raw ingredients and “maintain consumer confidence in our industry”.
The call follows data which showed that since the UK voted to leave the EU, the majority of food and drink companies have reported increased ingredient prices, a drop in product margins, and have concerns for the future raised by their EU workforce.
The chancellor also yesterday said the government would raise the living wage from £7.20 ($8.90) to £7.50 ($9.30) by April 2017, though the National Farmers Union (NFU) questioned how fast it would be implemented.
NFU director of policy Andrew Clark said: “The National Living Wage rate will be increased to £7.50 per hour in April 2017. The NFU strongly supports a living wage for all workers but we have expressed to Government our concerns about the speed of the implementation. Accelerating increases will make this even more difficult for employers and we remain concerned about
the impact on farm businesses.”
The NFU dubbed some of the Autumn statement “disappointing” and wanted more clarity on how the £23bn innovation and infrastructure fund would be spent.
Clark added: “The Chancellor’s planned reduction to the rate of Corporation Tax, while providing benefits to the supply chain, does little to help the majority of farm businesses that are unincorporated.”
“Farm businesses need to be able to retain and invest profits in infrastructure and equipment to improve their productivity and the tax system needs to recognise and support this, as it does other parts of the economy.”
“Although the Chancellor has announced a new National Productivity Investment Fund that will add £23 billion ($28.6bn) in higher value investment over the next five years, including a £2 billion ($2.5bn) investment in research and development, it is not clear where this will be spent.”
“The Government must continue its support of the Agri-Tech Strategy and this new investment simply must include the agri-food sector.”
