Cian Hassett, Trade Marketing Executive, London Office, Bord Bia - The Irish Food Board
Key events this week:
Boris Johnson defeated in Brexit and election votes. Following his governments loss of a majority earlier this week, the PM suffered a further humbling double defeat as MPs backed legislation to stop Britain leaving the EU without a deal. They then effectively blocked the prime ministers attempt to call an early election, to regain the initiative on Brexit, as he was unable to reach the two-thirds majority required. Mr Johnson, facing growing anger from Tory MPs over his handling of Brexit, endured the two defeats within two hours on Wednesday night. He has said the proposed bill to prevent a no-deal Brexit represents a surrender since it would allow the EU to set the terms for any delay to Brexit. Following this Mr Johnson tabled a measure to hold a general election on October 15th, claiming it would allow the public decide whether he or Jeremy Corbyn would conclude Brexit negotiations.
Michel Barnier warns that Brexit talks are in paralysis. Barnier, the EU chief negotiator, has told EU27 diplomats that Brexit talks are stuck after Boris Johnson’s chief negotiator failed to provide any proposals to break a deadlock over the Irish backstop. The EU’s chief negotiator told envoys from member states that Britain was determined to diverge from EU standards as part of a future trade deal, adding further tension between Johnson’s government and the bloc. Mr Barnier warned that any free-trade deal where Britain could undercut Brussels standards would face ratification problems in EU Capitals, with places like Paris and The Hague determined to not allow Britain gain a competitive edge by undermining the single market.
Labour party eyes no-confidence vote next week. Jeremy Corbyn is planning to launch a vote of no confidence in the government, even as early as Monday, assuming that the proposed bill blocking a no-deal Brexit makes it through Parliament. While the Labour leader has the support of the Scottish National party, he is facing resistance from some of his own MPs, and even some smaller opposition parties. An attempt to dissolve parliament through the Fixed-term Parliaments Act (FTPA) was tabled on Wednesday when Labour ordered its MPs to abstain from voting, effectively blocking it as it could not reach two-thirds majority required.
Recession is highly probable in the event of a no-deal Brexit. A Think-tank report has concluded this week that an abrupt departure from the EU would bring significant disruption to life in the UK. The government report from the group UK in a Changing Europe outlined that an accurate prediction was impossible because it depended on the way households, companies and governments reacted. Despite the group’s pessimistic forecasts, it stressed that the day one impact of a no-deal Brexit might be “limited” and that the visible disruption may not be as immediate or visible as some reports suggested. The group’s director, Anand Menon, said that the bigger effects of a no-deal would be the long-term consequences, such as Britain needed to negotiate a deal with its largest trading partner from a more difficult position.
EU officials warn Boris Johnson that an election win will change nothing. European officials and diplomats have warned Mr Johnson that an early election win would do nothing to strengthen his ability to extract concessions from EU member states seeking to avoid a no-deal Brexit. Officials in Paris, Berlin & Brussels have insisted a Conservative election win would change nothing when it came to the EU’s negotiating position. While his attempt to call an election earlier this week was defeated, MPs will get another chance to vote for an early election on Monday. However it is unclear whether this will follow the Fixed Term Parliaments Act again, requiring the two-thirds majority, or whether a new legislation will be introduced to facilitate an early vote.
FDF adds weight to criticism of Michael Gove with warning of major fresh food shortages. Industry leaders have warned there will be major shortages of fresh food and drink, as they joined condemnation of the former Defra boss turned cabinet minister’s denial that fresh food would be impacted by a no-deal Brexit. On Thursday the FDF said the reliance on imports, combined with the timing of an October Brexit, meant shortages of fresh food were inevitable, especially fruit and vegetables. 40% of the UK’s food and drink imports come from or via the EU and their reliance on these imports climbs from autumn onwards as fresh food stocks decline. Shore Capital analyst Clive Black predicted supermarkets might bring in rationing of fresh food because of the disruption likely caused by a no-deal.
Supermarkets face 20% capacity cut in ‘best-case’ no-deal Brexit. MPs were told today thatsuppliers of supermarkets through Dover and Calais face a 20% reduction in capacity, even in the best-case scenario, if there is a no-deal Brexit. Karen Wheeler, who was in charge of Brexit border delivery at HMRC until June, revealed that because of the hold-ups anticipated at Calais in the event of a no-deal, thousands of trucks faced being stuck in major queues in Kent. This would come despite the UK’s plans to allow trucks into the UK without food and safety checks for at least six months after a no-deal, as French customs checks in Calais would be expected to lead to delays of up to eight hours. Wheeler went on to say that by the time she left in June, 70,000 out of 145,0000 businesses exporting from the UK had not even got an Economic Operator Registration and Identification (EORI) number, the most basic requirement of trading with the EU.
Sterling rose above $1.23 on Thursday, notching up more than a 3% gain against the dollar from the start of the week. This comes as investors cheered repeated blows to Boris Johnson’s attempts to push through a no-deal Brexit. The gains have made the pound the best performing major currency against the US dollar over the past two days. £1 is now worth €1.11 and $1.23.
Implications for Irish food & drink companies:
While parliament is still potentially to be suspended starting next week, there is a chance that the government can stop or further delay a no-deal Brexit. Whether this legislation will approved is unsure, but there is no guarantee that it will completely avoid a Brexit situation and currently across the UK companies are preparing for Brexit. As a result of this it is important that Irish food and drink companies are equally prepared for both possibilities that could arise from this. Bord Bia is providing a number of services which Irish food and drink companies can avail of.
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
- Supply Chain Optimisation 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/
The Department of Agriculture, Food and the Marine (DAFM) are also hosting numerous events over the next month based on Brexit and the steps that agri-food businesses can take to keep trade moving. More info on these, including registration links and the topics that will be covered, can be found at the below link:
https://www.agriculture.gov.ie/brexit/events/
DAFM Event Dates & Locations:
- 10th September: The Printworks, Dublin Castle, Co. Dublin
- 27th September: Johnston Castle, Co. Wexford
- 30th September: Radisson Blu, Little Island, Co. Cork
Looking ahead:
September/ October: MEPs hold hearings for proposed Commissioners
6th September: House of Lords to decide on no-deal Brexit legislation
9th - 12th September: Proposed suspension date for parliament – lasting 5 weeks
14th – 17th September: Lib Dem Conference
21st – 25th September: Labour Party Conference
29th September– 2nd October: Conservative Party Conference
14th October: UK Parliament returns – 3 sitting weeks before Brexit
17th – 18th October: European Council Summit
24th October: The earliest date a General Election can take place.