The Brexit effect on the food industry
June 24, 2017
Food prices are bound to increase in the UK, as a result of the already weakening pound, after Brexit. Additionally UK produced food products will become more attractive to overseas businesses, and therefore limit the supply to the UK market, having an inflationary effect on the UK products.
Concern in the UK Market: Although exports have reached their highest since 2013, this is not a firm indicator of what is going to happen when costs soar given the negative climate and challenging conditions. The members of FDF (Food and Drink Federation) have expressed their concerns about the food industry for the UK after Brexit. Over one out of three FDF members are deeply concerned about their business.
Problems with Non-UK Workforce: Another factor that needs to be taken into consideration, besides the uncertainty deriving from high prices in ingredients and raw materials, is the workforce in the UK. More specifically, the food industry employs a high percentage of professionals from the EU. With Brexit taking the country by storm, these professionals are in no way certain that they will remain in the UK. When considering that almost 130,000 professionals are non-natives, the impact of their possible relocation from the UK will hit the market hard.
A Window of Opportunity: According to the British government, there is a window of opportunity as to the role of the UK in the food industry. The government is working side by side with the industry towards ensuring that new, profitable international agreements come up. Even though food prices are bound to increase in the near future, this does not mean that the new agreements cannot force the costs down.
Challenges Requiring Imminent Attention: One of the main obstacles that need to be tackled with in this department is the EU Free Trade Agreement (FTA) that will cease to be effective after Brexit. Without this agreement, food prices in the UK will not be able to remain competitive. Although the pound has made exports climb to great levels over the past few months, this is a short term effect. After tariffs start crawling their way to UK food market, it is inevitable that the huge market of the EU will no longer be a viable investment for businesses in the UK.
Bottom Line: If you take into consideration the huge contribution of the UK food market to the countryís economy per year, with over £21.5bn in gross value, you can see why it is of utmost importance to deal with the Brexit effect on the food industry right away, so as to boost confidence in the local food market.