On Friday the 24th of June 2016, we woke to hear the UK had voted to leave the European Union. It was a small majority, but a majority all the same, so it will be democratically respected. A surprising result to many, even to some in the ‘Leave’ campaign it would seem, who faced the press with slightly startled looks on their faces last Friday. Leading leave figure and tipped next prime minister of the UK, Boris Johnston reassured people that the UK still wanted to trade with the rest of the world, including Europe. The markets had a rather predictable reaction, the value of the pound has fallen, and some 20% of share value has been knocked off the UK’s top banking institutions. The markets, skittish as they are, were generally assured by Mark Carney the governor of the Bank of England, stating all was calm and a period of quantitative easing will ensue (translation- we are printing money at full speed in the basement).
The press consensus on how this all came about is that the Brexit campaign was won largely by convincing large swathes of people who read red top newspapers that the Romanians, the Turkish (insert ‘fear’ here) were coming to get us. Immigration was a major issue, but was not necessarily based on true facts and figures. Convincing poor communities in the UK that economic hardships were due to being part of the EU, played well amongst a genuine feeling of disfranchisement with the ruling establishment. However a large part of the ‘vote leave’ movement was a purely democratic desire for self- governance. A populace example of this and we do not kid here, was on the point that the EU controls what shape bananas should be, to many a voter this seemed ridiculous. As one old man was filmed after the result, crying “we won our country back” or at least our right it would seem to eat wonky bananas. The true facts are there was never an EU law controlling the shape of bananas (but the Eurocrats did once consider it) and this summarises the Brexit campaign well. The fact the UK was a massive player in the EU and a major decision maker, was downplayed somewhat. The ‘remain’ campaign used the economic factual argument in pretty stark terms, but were not passionate about the benefits of EU membership beyond that and so here we are……
So what does Brexit mean for health food businesses? The answer to this question is very important to Avena Consultants and our clients, so we have put together a Q & A section to cover the basics, full article here.
AVENA’s Q n A on Brexit summary:
How long will Brexit take? 2-4 years
What will the UK’s new relationship with the EU be? Avena predicts a free trade agreement with the EU, including the free movement of people. We predict the UK will become the 5th member of an organisation called the European Free Trade Association (EFTA). The other four current members are; Iceland, Lichtenstein, Norway and Switzerland.
How will trade and import/exports be affected? For the next two years at least there will be no change, if a free trade agreement is reached, companies exporting to the EU may not have to pay VAT on goods. They may continue to pay excise duties on some goods, this may indeed be the case for food products.
Where should we locate our business? If you are a non EU exporter to the EU, you may consider having a base in an EU nation, not the UK in future or if you are a UK based business that sells a lot of product to multiple EU countries, then a relocation may be on the cards. The best location, will be dependent on the shape of any trade agreements the UK have with the EU in the future.
Does this mean we no longer have to follow the Nutrition and Health Regulations? While the UK is negotiating departure all EU claim law persists, post that stage we predict in return for a free trade agreement, that EU law claim will continue to persist on UK sold products.
Does this mean we no longer have to follow other EU laws on Foods, Medicines and Cosmetics?
This is very unlikely, as EU Directives on the rules for such products have already been transcribed into UK law, we deem it very unlikely that these laws will be changed within the UK for years to come, no matter the shape of the UK’s future relationship with Europe.
I am a non EU exporter, selling goods to the UK what will change?
Nothing for the next 2-4 years. You still need to comply with EU wide product law and we predict things like your labels, will continue to have to be EU style long term, because the UK will probably incorporate EU product law in return for some sort of trade agreement with the EU in future.
If things change Avena will let you know.