Speaking after The Food & Drink Innovation Network’s Brexit conference yesterday (October 11), Wright told FoodManufacture.co.uk: “I would tell food manufacturers: ‘don’t panic’. This is a slow burn.
Following a turbulent week for sterling in the markets, Wright said: “We’re at the point of maximum ignorance and we have to see what the government wants to work out and then we will be able to make an assessment of whether it’s enough.”
The FDF boss said food and drink manufacturers’ concerns focused on three key areas. Those were the regulatory framework, the uncertain labour market and rising costs.
‘A big concern to the industry’
Regulatory framework concern stemmed from the uncertainty surrounding the UK’s access to the Single Market with its 500M customers. Quitting the Single Market could disadvantage manufacturers’ exports to EU Member States.
The uncertain labour market remained a concern for the food sector, Wright said. One in 12 businesses that employed non-UK EU workers had reported that some of their continental workers intended to return home. He said the lack of information from the government was worrying, although he speculated about the cause of it.
Wright said: “[The government] could be working on a proposal for the Brexit negotiations – that would be available to the EU commission or to the other EU Members – which would involve some form of tit-for-tat. So, that’s if EU workers from the Members from the mainland can stay here then they will do that as long as UK workers on the mainland can stay there too.”
Rising costs of imports fuelled by the falling value of sterling, would lead to increased costs for food manufacturers. Those increased costs could be passed onto shoppers in the form of higher food prices over the next 12 months, said Wright.
The cost of living rises
The FDF boss predicted that consumers would begin to see food prices rise early next year, as the cost of living rose.
“I expect to see [consumers feeling the effect of Brexit] across all industries towards the end of the first quarter next year. In terms of the food industry we’ll see food prices at various points over the next twelve months.”
Following Wright’s comments yesterday, the FDF revealed today (October 12) that 70% of its members were less confident about the UK business environment than before the EU referendum. A large majority of those surveyed (71%) that employed non-UK EU staff said their continental employees had expressed concerns over the referendum result.
Wright said: “The mounting level of concern about the uncertainty [among manufacturers] is really a reflection of the fact that at this point, and over the next few weeks and months until the triggering of Article 50, we’re at the period where we have the most questions and the fewest answers.”
Meanwhile, the British Retail Consortium revealed this week that the supermarket price of meat and wine would be pushed up for consumers, should the UK lose access to the Single Market. It said these costs would inevitably affect consumers.
Three key Brexit concerns for FDF boss Ian Wright
- Rising costs
- Labour market
- Regulatory framework