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TITLE 1 – ARIAL 110PT, BLUE
BOLD CAPITALS Title 2– Arial 90pt, light grey
Title 3 Calibri 48pt, blue Detail text – Calibri 36, blue
9 – 147 - 184
88 – 89 - 90
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255 – 209 - 92 Declan McHugh, Lexington Communications
BREXIT AND FOOD
Lexington Communications | Food Matters Live 2017
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Contents
1. Political context • May’s tale of two speeches
• UK
• EU27
2. Brexit negotiations
3. Key issues for Food and Drink
4. Scenarios and probabilities
Political context
Lexington Communications | Food Matters Live 2017
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0 – 161 - 152
255 – 209 - 92
247 – 141 - 51
145 – 109 - 172
58 – 169 - 198
51 – 180 - 172
255 – 218 - 126
245 – 163 - 93
250 – 113 - 85 249 – 77 - 42
88 – 89 - 90 209 – 210 - 211
Slide title – Calibri 66, blue Content title – Calibri 40, dark grey
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May’s Brexit vision: a tale of two speeches
Lancaster House speech – Jan 2017 • Control of borders • Regain sovereignty • Out of SM and CU • Global trading nation • No longer paying ‘vast sums’ to EU • Want ‘close and special partnership’ • But no deal better than bad deal • Threat to become Singapore
Florence speech, Sept 2017 • Time limited “implementation”
period based on existing terms • £20bn opening financial offer • Singapore threat removed • “practical approach to regulation” • Ongoing role for ECJ
Lexington Communications | Food Matters Live 2017
9 – 147 - 184
0 – 161 - 152
255 – 209 - 92
247 – 141 - 51
145 – 109 - 172
58 – 169 - 198
51 – 180 - 172
255 – 218 - 126
245 – 163 - 93
250 – 113 - 85 249 – 77 - 42
88 – 89 - 90 209 – 210 - 211
Slide title – Calibri 66, blue Content title – Calibri 40, dark grey
Content text – Calibri 28, dark grey Content text – Calibri 24, dark grey
Government more pragmatic but weak and divided between Leave/Hard v Remain/Soft
Parliament beginning to have more influence – could dictate softer approach
Labour now unified as the party of ‘soft Brexit’ – unions play critical role
Potential for serious political crisis that could bring government down
But Fixed Term Parliament Act and Tory fear of Labour works against early poll
UK politically divided and unstable
Lexington Communications | Food Matters Live 2017
9 – 147 - 184
0 – 161 - 152
255 – 209 - 92
247 – 141 - 51
145 – 109 - 172
58 – 169 - 198
51 – 180 - 172
255 – 218 - 126
245 – 163 - 93
250 – 113 - 85 249 – 77 - 42
88 – 89 - 90 209 – 210 - 211
Slide title – Calibri 66, blue Content title – Calibri 40, dark grey
Content text – Calibri 28, dark grey Content text – Calibri 24, dark grey
EU27 unified and sticking to sequencing agreed at outset of the process
Money the key issue – UK needs to tie to transition
Basic position is that there can be “no cherry picking”
Refuse to accept UK can ‘have cake and eat it’ Brexit
UK must be seen to be worse off as a consequence of Brexit
Unified EU playing hard ball
But EU27 still favour a deal and will not want a chaotic Brexit
Brexit negotiations
Lexington Communications | Food Matters Live 2017
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0 – 161 - 152
255 – 209 - 92
247 – 141 - 51
145 – 109 - 172
58 – 169 - 198
51 – 180 - 172
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245 – 163 - 93
250 – 113 - 85 249 – 77 - 42
88 – 89 - 90 209 – 210 - 211
Slide title – Calibri 66, blue Content title – Calibri 40, dark grey
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Brexit timetable
Lexington Communications | Food Matters Live 2017
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51 – 180 - 172
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250 – 113 - 85 249 – 77 - 42
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Key priority for business – but a ‘wasting asset’
Division in UK government – but core position that ‘principles’ must be agreed in Q1 2018
Status quo the only realistic option – but customs union a sticking point
How long can a transition last? Politics vs practicality
Ongoing uncertainty still likely – ‘nothing is agreed until everything is agreed’
Transition the critical issue
Key business issues
Lexington Communications | Food Matters Live 2017
9 – 147 - 184
0 – 161 - 152
255 – 209 - 92
247 – 141 - 51
145 – 109 - 172
58 – 169 - 198
51 – 180 - 172
255 – 218 - 126
245 – 163 - 93
250 – 113 - 85 249 – 77 - 42
88 – 89 - 90 209 – 210 - 211
Slide title – Calibri 66, blue Content title – Calibri 40, dark grey
Content text – Calibri 28, dark grey Content text – Calibri 24, dark grey
What is at stake?
Over 4,000 European regulations cover food, farming and environmental standards
400,000 jobs in food and drink manufacturing in over 6800 firms
Food industry adds £28.2 billion to GDP and generates more than £20 billion in exports
Almost a third of food manufacturing workforce are EU nationals
UK is Ireland’s largest trading partner in food
and drink
Big manufacturers have complicated pan-
European supply chains
More than 70 per cent of UK exports and imports
with EU
Lexington Communications | Food Matters Live 2017
9 – 147 - 184
0 – 161 - 152
255 – 209 - 92
247 – 141 - 51
145 – 109 - 172
58 – 169 - 198
51 – 180 - 172
255 – 218 - 126
245 – 163 - 93
250 – 113 - 85 249 – 77 - 42
88 – 89 - 90 209 – 210 - 211
Slide title – Calibri 66, blue Content title – Calibri 40, dark grey
Content text – Calibri 28, dark grey Content text – Calibri 24, dark grey
Key issues
Exchange rate: Sterling could slump further in 2018
Customs: New processes not possible in two years
Tariffs: WTO terms hit food hard
Free movement: unskilled permanent labour to be curbed
Regulation: Access to SM depends on
harmony
Ireland: Hard border outside CU
unavoidable
New markets: US trade deal rests on
agriculture
Scenarios and probabilities
Lexington Communications | Food Matters Live 2017
9 – 147 - 184
0 – 161 - 152
255 – 209 - 92
247 – 141 - 51
145 – 109 - 172
58 – 169 - 198
51 – 180 - 172
255 – 218 - 126
245 – 163 - 93
250 – 113 - 85 249 – 77 - 42
88 – 89 - 90 209 – 210 - 211
Slide title – Calibri 66, blue Content title – Calibri 40, dark grey
Content text – Calibri 28, dark grey Content text – Calibri 24, dark grey
Potential Brexit scenarios
Hard Soft
Orderly
Chaotic
• Transition agreed early • UK leaves SM and CU long term • FTA agreed, minimising new tariffs • New customs processes phased in • Special arrangements agreed with Ireland • Labour movement but with restrictions • Costs increase and prices rise over time • Sterling and economic growth weaken
• No transition • UK leaves SM and CU • No FTA with EU agreed – WTO rules apply • Customs systems unable to cope with new checks • Supply chains disrupted • Costs increase and prices rise • Question marks over EU/UK citizen status • Sterling slumps, political and economic crisis
• Transition agreed early • Long term settlement involves ongoing UK
membership of SM and CU – or wide market access and associate membership
• Broad regulatory harmony preserved • Ongoing movement of labour • Position of EU/UK citizens settled • Economic improvement
• Last minute status quo transition deal • Failure to agree long term settlement • Transition deal drags on without end • UK becomes rule taker • EU immigration falls • Questions over citizen status • Political and economic uncertainty
Lexington Communications | Food Matters Live 2017
9 – 147 - 184
0 – 161 - 152
255 – 209 - 92
247 – 141 - 51
145 – 109 - 172
58 – 169 - 198
51 – 180 - 172
255 – 218 - 126
245 – 163 - 93
250 – 113 - 85 249 – 77 - 42
88 – 89 - 90 209 – 210 - 211
Slide title – Calibri 66, blue Content title – Calibri 40, dark grey
Content text – Calibri 28, dark grey Content text – Calibri 24, dark grey
Risk assessment
Likelihood (1 = low
5 = High)
Potential negative impact (1 = low / 5= high)
5
4 Hard orderly
Brexit
3 Soft orderly
Brexit
2 Soft chaotic
Brexit
1 No Brexit Hard chaotic
Brexit
1 2 3 4 5
Lexington Communications | Food Matters Live 2017
9 – 147 - 184
0 – 161 - 152
255 – 209 - 92
247 – 141 - 51
145 – 109 - 172
58 – 169 - 198
51 – 180 - 172
255 – 218 - 126
245 – 163 - 93
250 – 113 - 85 249 – 77 - 42
88 – 89 - 90 209 – 210 - 211
Slide title – Calibri 66, blue Content title – Calibri 40, dark grey
Content text – Calibri 28, dark grey Content text – Calibri 24, dark grey
CONTACT
Declan McHugh
Lexington Communications
0207 025 2315
079 666 12829
