Political uncertainty continues, default remains the same

Wednesday, 16 January 2019

Yesterday (15 January) saw UK MPs fail to back the Governments’ withdrawal agreement with the EU, so what happens next?

Firstly, it is important to remember that, at present, the default position (if nothing is agreed) is a No Deal Brexit. This would mean leaving the European Union on the evening of 29 March, resulting in World Trade Organisation (WTO) rules.  Amongst the implications of WTO, our trade with the EU would be subject to a range of tariff and non-tariff barriers. And as AHDB have explored in several Horizon reports, those barriers for agriculture tend to be significant.

Within the agricultural industry, recent discussion has focused on the possibility for the UK to unilaterally reduce tariffs for imports. WTO rules means that this wouldn’t just apply to our imports from the EU, but would apply to all imports.  At the same time, it’s likely that our exports to the EU would face tariffs. Few relish the double whammy of effectively making it harder to access UK agriculture’s largest and nearest export customer, whilst being exposed to lower priced competition from around the world. This is a scenario (unilateral liberalisation) that AHDB modelled in our impact assessment work.

Whatever your preferred choice of media, there’s no escaping the politics right now. From TV screens to twitter timelines, speculation on what happens next is readily available. Invariably, they are currently focused on the range of options that could still occur and there is no need to repeat those here in detail. Yet whether it’s No Deal or No Brexit or anything in between, the bottom line is that farmers still face uncertainty when it comes to future trade policy and dynamics.

Clarity is something we cannot expect for a little longer, unfortunately. All we know is the current default position is the leave the EU on 29 March. Government is actively encouraging businesses to explore the implications of a no deal scenario. Farm businesses should not be immune from that.

The scale of the potential challenge must be appreciated by businesses at every level of the supply chain. It is important for businesses to plan accordingly and look at contingency planning for the no deal scenario. AHDB has various tools and analysis available on its website that can help with this.