(Brussels, 09 April 2019) In view of this week’s extraordinary European Council Summit on Brexit, FoodDrinkEurope reiterates that the agri-food sector will be particularly vulnerable in the case of a “no-deal Brexit”.
Europe’s food and drink industry has proven its resilience time and again. This resilience, however, may not be enough to combat the sudden economic disruption of a no-deal Brexit. We therefore recommend that an extension to the Article 50 procedure to allow for an orderly Brexit be agreed in this week’s summit. We think it important that a transition period be included in any withdrawal agreement, so that both businesses and consumers can best prepare for the new business landscape post-Brexit.
An end to frictionless trade and regulatory alignment between the EU and the UK will be disruptive to the food and drink industry. FoodDrinkEurope has stressed on various occasions the fact that a no-deal Brexit will have catastrophic consequences for our industry. For this reason, Europe’s food and drink manufacturers welcome the recent announcement of temporary contingency measures which provided much-needed certainty to businesses as they prepare for the UK’s departure from the European Union. Nevertheless, more contingency measures may be necessary should the UK crash out of the EU.
The food and drink industry is the EU’s largest manufacturing sector and it employs 4.57 million people directly across all Member States. In 2018, the UK imported €33 billion in food and drink products from other EU countries. Conversely, the EU imported €14.4 billion worth of food and drink products from the UK. Should the UK leave the Single Market and the Customs Union, there will be significant difficulties in continuing this trade relationship. This will effectively be impossible if the UK leaves without a deal, introducing increased customs checks, and putting an end to frictionless, tariff-free trade. A “no-deal Brexit” will see a significant decrease in exports coupled with a dramatic loss of revenue. This would inevitably cause a loss of jobs, disproportionately impacting on small and medium sized enterprises (who make up 99% of our 295,000 companies across the EU).
A non-orderly Brexit would impact on highly integrated supply chains, just-in-time processing and the sector’s dependence on perishable products. Burdensome and unavoidable procedures, such as official controls of goods, sanitary and phytosanitary inspections, veterinary certificates and import tariffs will lead to increased delays for checks at borders and raise the costs for both the EU27 and the UK. However, it will ultimately be consumers that will bear the brunt of Brexit, with increased costs and disruption in access to the food they enjoy and, in some cases, that they need.
FoodDrinkEurope is determined to help its membership best prepare for Brexit – to the benefit of the industry, jobs and consumers alike. We look forward to continued cooperation with the European Commission and national authorities in order to ensure that food and drink companies are as prepared as possible for future trade with the UK as a third country. This work is ongoing, and we hope for a positive outcome of this week’s summit, indicating a clear way forward.