No-deal 'threatens food security' groups warn after PM's statement

By James Ridler contact

- Last updated on GMT

The move towards an Australian model for trade post-Brexit threatens a no-deal situation that risks the UK's food security
The move towards an Australian model for trade post-Brexit threatens a no-deal situation that risks the UK's food security

Related tags: Brexit

A no-deal Brexit will be bad for food security, bad for business and bad for consumers, according to trade bodies commenting on the Prime Minister’s warning to UK businesses today (16 October).

At a Downing Street press conference to update journalists on the UK's progress in tackling COVID-19, Johnson said: "On where we are with our friends and partners in Europe, I think we have got to the stage alas where they don't seem to want to progress a free-trade deal. Unless that fundamentally changes then we're going to come out on Australian terms, but we'll prosper mightily nonetheless."

Speaking at a recent summit, Boris Johnson confirmed the EU had rejected a Canada-style deal for the UK and consequently announced plans to forge a trade agreement similar to that between the EU and Australia.

“Of course we are willing to discuss the practicalities with our with our friends​ [the EU], where a lot of progress has already been made, on such issues as social security, and aviation, nuclear cooperation and so on.

“It’s clear from the summit that, after 45 years of membership, they are not willing unless there is some fundamental change of approach to offer this country the same terms as Canada.”

Prepare for change

He advised businesses in Britain to start preparing for the change, which he confidentially remarked would see the UK in charge of its own borders, fisheries and laws. He did not rule out a deal and many commentators argue he is adopting a hard line to force the EU's hand.

However, Food and Drink Federation chief executive Ian Wright warned the Prime Minister’s statement signalled the UK was headed into very dangerous territory. He said the perils of a no-deal exit for British food and drink manufacturing remained as real as ever.

“We need leaders on both sides to find a way past the current impasse in order to progress talks,” ​said Wright. “In the event of a no-deal Brexit, shoppers will – literally – pay a heavy price. Imported food and drink from the EU will face eye-watering tariffs averaging 18% kick starting price rises.

Further disruption

“At the same time border delays and disruption will bring further costs which will not be subsumed by industry. A no-deal outcome is bad for food and drink businesses, bad for food security, and bad for every household in Great Britain.”

Logistics UK director of policy Elizabeth de Jong echoed Wright’s concerns on the announcement of a no-deal Brexit, warning of the impact on the supply chain.

“To keep Britain trading, trucks must keep going through the borders with the least possible friction,”​ she explained. “A deal with the EU is vital to achieve this and to enable the sector to focus on maintaining its resilience during the COVID-19 pandemic and investing to improve performance.”

Responding to Johnson's stance, Dominic Watkins, head of food group at law firm DWF, said: "Despite Boris's positive rhetoric and glib comments that we all knew that a change was coming so today’s announcement is OK, a no-deal Brexit is going to be a significant problem for the food sector.

'No understanding of supply chains'

"This announcement will mean that there is yet another shift in focus for UK businesses as they try to navigate what they need to do and when. Suggesting that ten weeks is enough time to get ready suggests there is no real understanding of how supply chains work. One only has to look in our shops, currently filled with Christmas products, to know that buying, and its impact on supply chains, happens seasons in advance.   

"Businesses will now need to incur the cost of preparing for both a deal, in whatever terms it may come, as well as a no-deal scenario. This means increasing costs and uncertainty at a time when half the population is under increased COVID measures and many are struggling. Businesses need certainty. They need clarity and they need more than a guess at how to make their products and services compliant after January."

John Perry, managing director at leading supply chain and logistics consultancy SCALA, commented: “It is extremely difficult for businesses to prepare for anything when we have had to endure four and a half years of mixed messaging, confusion and uncertainty – particularly when we still do not know whether this is a genuine warning to prepare, or a final negotiation tactic to secure a deal at the eleventh hour. 

'Wellbeing of businesses an afterthought'

“The headlines from recent weeks around the construction of inland revenue sites and up to 7,000 trucks being stuck in a lorry park in Kent - clearly last-minute contingency plans - indicate a Government that had the wellbeing of its businesses in the event of a no-deal as an afterthought, not the critical priority it clearly should have been. At this stage, it is unlikely that any preparations we carry out in the now-limited timeframe will be enough to ensure smooth border crossings and continuation of supply as we know it. 

“If the Government is truly now turning their back on trade talks with the EU, we would urge them to now focus their efforts on mitigating the damaging impact this move will no doubt have on UK businesses and their supply chains. The industry is ready to take whatever action it can to ease the transition, and we would urge Government to work with the industry to put in place measures to support businesses and minimise the heavy cost that companies, their supply network and their customers are now likely to have to pay.” 

Commenting on the prospects of a no-deal, Andrew Hood, partner at European law firm Fieldfisher and former general counsel to David Cameron, said: "On the plus side, businesses will have a lot more clarity on what they will face on 1 January. On the down side, there will be a lot of work for many to do with added complications on trade and regulation, increased costs through tariffs and duties and a updating their commercial arrangements and contracts to reflect this new reality."

Meanwhile, farmers have expressed 'bitter disappointment' at the Government's refusal to back House of Lords amendments to the Agriculture Bill​ committing UK trade deals to high food standards and independent scrutiny.

Related topics: Supply Chain, Brexit, Operations

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