Alison Ryan, London Office, Bord Bia – Irish Food Board
Key events this week:
The UK economy suffered its first quarterly contraction in seven years. Growth in the UK’s dominant services sector came to a near standstill in June, confirming a gloomy outlook for a month. The figures indicate that the British economy contracted by about 0.1% in the three months to June, according to IHS Markit and the Chartered Institute of Procurement and Supply (Cips). The last time GDP shrank for one quarter was in the final three months of 2012. Two consecutive negative quarters constitute a recession.
The British manufacturing industry slumped to a six-year low in June, as falls in output amid sagging business confidence and the unwinding of pre-Brexit stockpiling earlier this year is reported. The purchasing managers’ index compiled by IHS Markit, the research group, fell from 49.4 in May to 48 in June, missing expectations as it hit its lowest level since 2013. The reading indicated that for a second consecutive month, a majority of businesses had reported a fall in output.
Jeremey Hunt announced this week that he would decide by September 30 whether to keep negotiating with the EU or pursue a no deal. He made this announcement alongside the unveiling of his 10-point plan for Brexit. This included engaging with EU leaders over the summer and cancelling August leave for Whitehall officials.
At hustings in Belfast this week, Boris Johnson said Norther Ireland could be turned into a Singapore-style tax-free zone under proposals he is considering, whereby tax-free ports would be created in the region. However, the idea, which has also been floated by Johnson’s rival, Jeremy Hunt, has been criticised as a sign of “desperation” to win the Tory party leadership and, ultimately, a backdoor route for tax evaders and money launderers.
The chancellor, Philip Hammond, has warned that a no-deal Brexit would cost the UK economy up to £90bn. This followed on from his attacks on the spending pledges of Boris and Hunt, which he says are damaging the Conservative Party’s reputation for fiscal prudence.
Sammy Wilson, the DUP’s Brexit spokesman, welcomed the hard Brexit stance of the two leadership contestants. Wilson urged Hunt or Johnson to push back against Irish warnings about the imposition of a hard border with Northern Ireland, when one of them becomes prime minister.
Implications for Irish food & drink companies:The threat of the UK leaving the EU without a deal on October 31 has increased, with both Conservative leadership contestant signalling that they will leave the EU on October 31, with or without a deal. It is crucial therefore, that Irish food and drink manufacturers continue to prepare for all Brexit possibilities, including a no-deal Brexit.
The 2019 Brexit Barometer Industry Findings Report and Action Plan can now be downloaded from the Bord Bia website. The Action Plan provides practical information and outlines a number of steps that Irish food and drink companies can take in order to mitigate the risks posed by Brexit.
Bord Bia has also announced a new range of support services for Irish food and drink companies to help them to prepare for Brexit. There include:
- Supply Chain Mentoring Programme
- Customer Readiness Training
- Financial Risk Mentoring Programme
- Sanitary & Phytosanitary (SPS) Training Programme
- Supply Chain Optimisation Workshop
- Commercial Marketing Strategy Workshop
- Key Customer Management Programme
Information on the support services can be found by following the above links. Alternatively, all information can be found on the Brexit page on the Bord Bia website: https://www.bordbia.ie/industry/trading-with-uk/
Looking ahead:
- A new Conservative Party leader is expected to be elected in the week commencing July 22.
- October 31 is the current Brexit deadline.