79.Brexit will bring considerable challenges and change to the UK processed food and drink sector after decades of building supply chains across Europe and enjoying tariff-free trade and free movement of goods to the EU. The sector needs certainty regarding the terms of our future relationship with the EU after the transition period in order to adapt.
80.Defaulting to WTO tariffs would not be an acceptable outcome for the sector and would seriously jeopardize the competitiveness of UK exports and risk increasing prices for consumers. Negotiating a free trade deal with the EU is the biggest priority for this sector. The Government should also seek to replicate all existing EU trade deals with third countries as they constitute our biggest export destinations.
81.Ensuring that movement of goods remains substantially unhindered is another imperative for an sector that is characterised by just-in-time delivery and short shelf-life. This is particularly true for the businesses that operate across the UK and Ireland border, where a solution to the hard border problem is yet to be articulated and agreed.
82.There will be trade opportunities arising from leaving the EU and in the long term, the UK’s trade balance may benefit from diversifying and relying less on the EU as a trading partner. However, the opportunities are both relatively slight and distinctly uncertain, when set against the benefits to the consumer of free access to the current range of products facilitated by conformity with agreed standards. Therefore, at least in the short term, remaining aligned to EU regulation and an influence in EU agencies is key to protecting the competitiveness of UK exports. There are areas in which the UK may benefit from diverging but consumers will not tolerate it leading to lower standards.
83.The sector is already dealing with a skills gap which is predicted to worsen in the next few years. It will find it very challenging, at least in the short term, to replace the substantial number of EU nationals within its workforce. It is essential for manufacturing, hospitality and R&D that they keep the ability to bring in the skills they need.
84.More than anything, UK businesses need clarity and certainty about the future of our relationship with the EU. The Government is almost out of time to negotiate an orderly trade system after the transition that will provide businesses with the certainty they need to invest and innovate.
Published: 22 April 2018