Special Report: Key Brexit Concerns: Labor Shortages, Tariffs and Food Price Hikes

03 Jul 2017 --- British Prime Minister Theresa May says she is pushing ahead with a “smooth and orderly” Brexit, despite the fact that she failed to reach a majority vote in the recent UK general election and propped up her Government with the Democratic Unionist Party (DUP), well known for its right-wing social views and politics.

The talks have officially started, but there is a very long way to go – and meanwhile industries in and outside of the UK are desperately seeking some sort of clarity on what Brexit negotiations will actually mean in real terms.
 
UK Brexit Secretary David Davis said talks got off to a “promising start,” while European Union chief negotiator Michel Barnier, insisted he wouldn’t be making any concessions or expecting any from Britain in return. 
 
The Queen’s Speech
Earlier in June, the Queen of England announced a host of proposed new laws and of the 27 bills, eight related to Brexit and major issues like trade, customs and immigration.
 
These eight bills need to review and redesign systems that go back a long time (in some cases decades) – all by a government leader who did not win enough votes for a clear majority. 
 
A sure sign that the UK remains polarized as much as it was this time last year when the initial referendum took place (51.89 percent voted leave against 48.11 percent voting to remain). 
 
May had hoped that calling a snap general election (one was not actually needed until 2020) would strengthen her Parliamentary majority and therefore her position as she began to negotiate the divorce with the EU.
 
However, things didn’t exactly go according to plan and Labour, led by Jeremy Corbyn, gained some serious ground and May was left scrambling for a political party to join forces with. 
 
Nevertheless the same careful political handling on the delicate situation that is Brexit is now underway. 
 
Food Industry Response
One of the biggest concerns about Brexit centers on the rights of EU nationals living in the UK. May has already told European leaders that more than three million EU nationals will be given the right to stay in the UK permanently with the same rights as British citizens. 
 
The UK food and drink industry welcomes the prime minister’s EU citizen offer. 

Food and Drink Federation director general Ian Wright CBE, says: “FDF welcomes the Prime Minister’s proposals regarding the rights of EU citizens to stay once we have left the EU. FDF was the first trade association to call for the right to remain following last year’s referendum result and have consistently made the case to Ministers and officials, in the UK and EU. We are therefore pleased that Government has listened to our members on such a crucial issue.”

“We employ 117,000 EU workers within the food and drink sector and they play a vital role in guaranteeing the success of the £110 billion ‘farm to fork’ food chain. They are hugely valued, but in the past 12 months have lived under a cloud of uncertainty. It is time to allay their fears.”

“We now look forward to further details from the Government and urge negotiators on both sides to resolve this matter swiftly.”
 
Helen Dickinson OBE, chief executive of the British Retail Consortium echoes these thoughts. 
 
“The retail industry’s biggest priority is to work alongside the Government to secure a fair Brexit for consumers. This means ensuring that ordinary shoppers aren’t hit with the cost of unwanted new tariffs and the UK is able to build new trading relationships with the rest of the world in the long-term. In particular, we will seek to work with the Government on the new Trade Bill, which will help in the development of international trade relationships and the Immigration Bill.”

“Employers throughout retail must be able to secure their current workforce and fill vacancies in the future. To do this, the Government must secure the rights of EU nationals living and working in the UK at the earliest possible opportunity during the withdrawal negotiations with the EU,” she says.
 
“We will also seek to work with government to design a new immigration policy that balances the need to control numbers with businesses’ requirements for non-graduate labor to fill vacancies.”
 
Meanwhile, the UK agriculture and farming sector is pushing the government to do more to secure a better deal for migrant workers as farms across Britain rely on a seasonal workforce coming from the likes of eastern Europe, to plug the gaps. 
 
Historically, farms have struggled to recruit British workers to do jobs like fruit picking and for decades UK farms have employed people from all over the world to temporarily live and work in Britain during busy harvesting periods.
 
Since the referendum, fewer migrants are coming into the country to work and the National Farmers’ Union says British farms are facing a crisis. 
 
As it stands, farmers, growers and the NFU are very concerned about the present lack of clarity on the government’s approach to agriculture post-Brexit. They say the right post-Brexit trade deal is absolutely critical but equally so is a new wider policy framework that better delivers for farming and the nation.
 
“The NFU has published a set of policy asks on labor, and participated in several government enquiries into the impact of Brexit on labor supply and the economy. Our latest labor provider survey reveals some worrying but not entirely unexpected trends of falling numbers of workers, fewer returnees and higher turnover rates,” says Alison Capper of the NFU.
 
“We need a commitment from government that growers will have access to the workforce they need, up to and after we leave the EU.”
 
“It’s vital that the crucial importance of migration for low-skilled work is recognized. Until now, high-skilled migration has received priority treatment. We challenge why this should be the case, when vital sectors of the economy, such as food and drink, rely heavily on large numbers of EU workers.”
 
The Value of Sterling
Another clear consequence of the Brexit vote is the depreciation and latterly the partial recovery of the pound. After a dramatic initial fall following the vote, sterling soared when May announced EU migrants could stay in the UK post-Brexit. 

And as each step of Brexit negotiations are revealed or at least get a little clearer, there is every chance that markets will respond positively as business across Britain and consumers get a clearer picture of their future outside of the EU. 
 
On the day that negotiations began sterling went up 0.22 percent. Compare this to the day of the referendum announcement in June last year when the pound slumped to a 31-year low. 
 
March 29, 2019 will be the day when Britain leaves the EU, unless the limit is extended in the meantime. This is with or without deals to cover the myriad of vital issues. 
 
The clock is ticking and the food industry, consumers and the people living and working in Britain, as well as the British citizens living and working abroad, wait with baited breath to be drip fed information on the future of their lives and country. 

by Gaynor Selby