Six months ago, during her campaign to become the UK prime minister, Theresa May defiantly announced that “Brexit means Brexit”. Following yesterday’s speech are we any the wiser? “Un petit peu”, as they would say in Brussels.
The big ‘news’ in a speech that lasted over an hour was May’s confirmation that the final deal will be put to a vote in both of the UK’s Houses of Parliament before it comes into force (what happens if MPs vote against it, is not clear). This was part of the prime minister’s primary objective “to provide certainty wherever we can. I recognise how important it is to provide business, the public sector, and everybody with as much certainty as possible as we move through the process,” she explained.
May was also crystal clear that the deal “cannot mean membership of the single market”. This announcement wasn’t a huge surprise – it would be incompatible with her immigration objectives (see box) – but nevertheless it is bold: we are talking about 500 million consumers, after all, with UK exports to the EU worth more than €9.2 billion and trade the other way amounting to close to €22bn (at the last count in 2015).
Back in the “Brexit means Brexit” speech last year, May had criticised the business leaders whose response to the referendum “has been not to plan for Britain’s departure or to think of the opportunities that withdrawal presents, but to complain about the result and to criticise the electorate”. So far, the food sector has sent mixed messages on Brexit.
For instance, rising ingredient prices and a fall in profit margins since the vote last June have seen confidence levels plummet, according to a survey by the Food & Drink Federation (FDF) in October. The findings mirrored those in a post-Brexit poll of FoodNavigator readers.
However, the Bank of Scotland food industry report in 2016, showed an industry with “bullish food and drink firms expecting to grow, recruit and innovate”. Still, uncertainty prevails and, understandably, some are still struggling to see what the benefits will be, at least in the short to medium term.
Legislation and labour
Regarding changes to national legislation after Brexit, Theresa May said: “The same rules and laws will apply on the day after Brexit as they did before. And it will be for the British Parliament to decide on any changes to that law after full scrutiny and proper Parliamentary debate.”
Dominic Watkins, who heads up the food group at law firm DWF, said the prime minister might be underestimating the scale of that particular job. “[Theresa May made] a pledge to convert the body of EU law in the British law, but [provided] no detail on how. That task alone is vast and far more complex than people realise. The idea that you might just replace the word ‘EU’ with ‘UK’ is far-fetched,” he told FoodNavigator.
On immigration, May said: “We will continue to attract the brightest and the best to work or study in Britain […] but that process must be managed properly so that our immigration system serves the national interest. We will always want immigration […] but the message from the public before and during the referendum campaign was clear: Brexit must mean control of the number of people who come to Britain from Europe. And that is what we will deliver.”
This offers little comfort to those who rely on labour from the EU, or those who seek to work in the UK’s food sector. “We look forward to understanding better how her proposals will impact on future access to skilled and semi-skilled workers from the EU,” said FDF director-general Ian Wright.
“We have significant concerns about the UK's prospects outside the single market and without certain elements of the EU Customs Union,” said Judith Bryans, chief executive at Dairy UK, which represents the country’s dairy supply chain.
With 80% of UK dairy exports currently going to EU countries, her members’ concerns are perhaps justified.
“…Any disruption to current agreements would have an extensive and costly impact on our industry”, she explained. A fall back to WTO default terms would have “disastrous consequences”, she warned.
Ian Wright, director general at the FDF, tried to put a positive spin on things, welcoming the prime minister’s commitment to “the freest and simplest possible trade arrangements with the EU”. Indeed, May said she would pursue a “bold and ambitious Free Trade Agreement with the European Union”, which should “give British companies the maximum freedom to trade with and operate within European markets – and let European businesses do the same in Britain”.
But this is where the speech began to morph from a “12 point plan” into what some commentators referred to as a “glorified wishlist”. Guy Verhofstadt, the EU Brexit negotiator, tweeted: “Britain has chosen a hard Brexit. May's clarity is welcome – but the days of UK cherry-picking and Europe a la cart [sic] are over.” May was defiant, though, emphasising that this was about more than the relationship with the EU.
"We want to get out into the wider world, to trade and do business all around the globe," she said. “Countries including China, Brazil, and the Gulf States have already expressed their interest in striking trade deals with us. And President Elect Trump has said Britain is not ‘at the back of the queue’ for a trade deal with the United States, the world's biggest economy, but front of the line”.
Put all your eggs into Donald Trump’s basket and you risk more than a few being cracked, but as food policy expert Nick Hughes put it last week, May’s cabinet has gone “big on bombast and flattery”in recent weeks when it comes to global trade. In a speech at a major farming conference earlier this month, secretary of state for food and environment Andrea Leadsom restated her desire to see “more Great British food grown, sold and consumed around the world”.
Sceptics wonder whether the UK is the economic David to Europe’s Goliath that Brexiters believe it to be. This morning, the German newspaper Die Welt went for the headline “Little Britain”, whilst the French centre-right MEP Alain Lamassoure suggested the country had chosen to sink itself. “It’s clear the interest for the British is 500 million customers in Europe, not just 65 million in Britain. When May comes to negotiating with a country like China, she can only offer 65 million British customers.”
Lamassoure claimed the objectives on trade amounted to “a kind of economic and business suicide”.
Director-general of the Confederation of British Industry ( CBI), Carolyn Fairbairn, said the prime minister had “changed the landscape. Businesses want to make a success of Brexit but will be concerned about falling back on damaging WTO rules,” she explained, adding: “The pressure is now on to deliver these objectives and achieve a smooth and orderly exit.”
Easier said than done. As Dominic Watkins, partner at law firm DWF, explained: “While Theresa May appears clear that the population had its eyes open and accepted [that] the road ahead will be uncertain, I am less convinced that this was the case and the enormity of the task has only just set in as the length and breadth of the speech demonstrates.”
Watkins said that the benefits from Brexit could take a generation to be realised “given all that is involved”. May doesn’t want there to be a “cliff-edge” for business as the relationship between the UK and the EU changes, but neither does she want an endless transitional status “in which we find ourselves stuck forever in some kind of permanent political purgatory”. She wants an agreement by the end of the two-year Article 50 process and a “phased process of implementation” thereafter.
On trade, for example, she offered up the idea of a cut and paste job (much like the one proposed for legislation, see box) when she suggested that any agreement “may take in elements of current single market arrangements in certain areas – on the export of cars and lorries for example, or the freedom to provide financial services across national borders – as it makes no sense to start again from scratch when Britain and the remaining member states have adhered to the same rules for so many years”.
Talk of this type of sectoral approach to free trade agreements “has the hallmarks of the Swiss position about it”, DWF’s Watkins told FoodNavigator, “but it is all down to the negotiating position”.
Reaction from Brussels was mixed. Many were thankful for some news and hungry to get on with the nitty gritty of the divorce agreement. “Sad process, surrealistic times, but at least more realistic announcement on Brexit,” tweeted Donald Tusk, president of the European council. “EU27 united and ready to negotiate after article 50.”
That will happen, as May has already confirmed, before the end of March. Her long-awaited 12-point plan is, without doubt, a much-needed start. “We do not want to turn the clock back to the days when Europe was less peaceful, less secure and less able to trade freely,” she insisted.
Many in EU food industry (and that for the time being includes the UK) will this morning (still) be left wondering whether the ability to turn it back just 208 days, to 23 June 2016 wouldn’t be such a bad thing.