Brexit bites back

Mark Lynch, partner at corporate finance advisory firm Oghma Partners, says Brexit’s systemic rather than teething problems are damaging UK food exports
Mark Lynch

Problems in exporting to EU markets for the food industry have been witnessed early this year by empty shelves in Northern Ireland, the complaints of Scottish fishermen and shellfish exporters, and a 63.6% decline in UK food exports to the EU in January.

A detailed report, published yesterday, from the British Meat Processors Association (BMPA) reviews the impact of the first three months of trading under the new Brexit regime. Its conclusions make uncomfortable reading for those arguing that the current issues are ‘teething problems’ and they once again highlight the cash cost of leaving the EU single market and customs union. Oghma Partners estimate that full-year food and drink exports to the EU will fall by between £2-4 billion.

In essence, the problems boil down to the need to provide additional documentation, which was not needed prior to Brexit. Certification is costly and, as importantly, time-consuming.

Due to the short shelf life of some of the exported meat products, the report suggests that: “Nor will it be possible to replace that lost trade by sending product to markets further afield. The nature of the fast-moving, high-value chilled fresh food trade we have with Europe cannot be replicated with countries that are not on our doorstep.”

Oghma Partners has seen first-hand that businesses are voting with their feet and moving operation from the UK to the EU single market, which is a loss of jobs and tax revenue for the UK.

The BMPA recommends three key action points that need to be taken to help repair the damage of Brexit to the UK food industry:

  • A Switzerland-like deal with the EU on a common veterinary area
  • An integrated, end-to-end electronic tracing and certification system
  • Establishing a government-led veterinarian and auxiliary inspection and certification system.

The government has had four years to prepare for leaving the EU and has failed, despite industry warnings, to do so adequately.

It seems it would be better to accept that these problems exist and to seek to rectify them through investing some of the suggested £350 million saved each week from leaving the EU in the UK food industry than accept a de facto permanent loss in business.