Food and drink exports threatened by Grexit

By Michael Stones contact

- Last updated on GMT

Grexit
Grexit
Greece’s exit from the Eurozone – known as Grexit – and possibly the EU threatens British food and drink exports to Europe, currency experts have warned.

A Grexit could sap investors’ confidence in the region, which would have a knock-on effect on UK exports to the eurozone, Carl Hasty, director of SmartCurrencyBusiness.com, told FoodManufacture.co.uk.

“A weaker euro would threaten to lower UK exporters’ price competitiveness,” ​he added. “As the eurozone is the UK’s largest exports market, UK food and drink manufacturers trading in that area would either have to lower prices to remain competitive, or to keep prices high, at the risk of lower levels of demand.”

Also, manufacturers currently trading with Greece will run the risks associated with trading with a country newly independent from the eurozone.

Looked increasingly unlikely

The warning came as a deal between the troubled nation and its creditors – the EU, the International Monetary Fund and the European Central Bank – looked increasingly unlikely.

Both parties have less than two weeks left to reach a debt deal or risk Greece defaulting on a £1.1bn (€1.6bn) loan repayment due to the IMF, which could pitch the country out of the eurozone and possibly the EU.

The Confederation of British Business (CBI) said unlocking the remaining instalment of Greece’s bailout fund was vital if the country is to avoid default or exit from the Eurozone. “It’s essential that the eurozone prioritises long-term sustainability and certainty,” ​said, CBI economics director Rain Newton-Smith.

“A successful deal would help promote growth and stability throughout the eurozone.”

‘Stability throughout the eurozone’

Negotiators needed to move quickly towards a new bailout programme that secures Greece’s finances for the long term, but was also realistic about Greece’s ability to pay and carry out meaningful structural reforms, he added.

Grexit threat

“A weaker euro would threaten to lower UK exporters’ price competitiveness.”

  • Carl Hasty

Hasty warned in January that the victory of the ruling left-wing Syriza party – on an anti-austerity agenda – could threaten British food and drink exports​ to Eurozone countries.

Meanwhile, the Food and Drink Federation (FDF) said it had received numerous approaches from groups coordinating pro-EU campaigns and its position on the EU had not changed.

“The EU has a key role to play in meeting the growing global demand for food while adapting to the impacts of climate change and dwindling resources,”​ said FDF director general Ian Wright.

“UK food and drink manufacturers want to be part of a strong, outward facing, competitive EU that leads through innovation supported by science and evidence-based policy making. We call on the Treasury to publish full economic assessment of the options as part of the European Union Referendum Bill.”

Greece has delayed an earlier €300M payment into those due on June 30.

What does Grexit mean?

“If you haven’t seen this word before, you're not alone. It’s a newly-coined term created by Citigroup’s Ebrahim Rahbari and first published in an informational paper authored by him and Citi chief economist Willem Buiter. It combines Greek or Greece with the word exit and refers to the possibility of Greece leaving the eurozone. The word has been picked up by media worldwide and it may well worm its way into the official lexicon.”

  • Source: AboutTravel

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