Brexit: Review for the farming industry
The UK electorate has made a decision to leave the EU, after very vigorous campaigning which included all sorts of predictions and warnings on the outcome of the vote from both sides of the political spectrum, as well as our international allies and trading partners. This result will likely have a profound economic effect, but right or wrong, it is a resounding victory for democracy.
What does the Brexit mean for UK farmers?
In the short term there has been some uncertainty. Financial markets have a profound dislike of uncertainty and this has already been shown by stock and currency markets worldwide, although to some extent that will reflect surprise at the reversal of previous expectations, rather than underlying fears for the UK economy. The slide in sterling is, however, starting to be reflected in an increase in the UK value of internationally traded crops, so perhaps there may be better selling opportunities in the weeks leading up to harvest.
In the medium term, nothing much is going to happen. There may well be changes to the Finance Bill, so all bets are off on how that will turn out now, and there will be a period of negotiation about withdrawal, which looks as if it will take years rather than months. There has been some suggestion that the political establishment may try to mitigate the extent of the withdrawal. Given the size of the electoral shot across the political bows, that seems unlikely, but stranger things have happened.
In the longer term we are moving into the unknown. If the fall in sterling is sustained it will undoubtedly make our imports more expensive, but the reduction in the international price of our exports will make any new tariff barriers almost irrelevant. There may be a problem with seasonal migrant labour, and any successor to the Common Agricultural Policy in the UK will be a national rather than international project. In any future support regime farmers will be competing for government funds against other entities, some of whom may carry more votes, and we may see more difference in the support regimes between the UK regions. Imports may be more expensive and, eventually, we may see some reductions in the bureaucracy which has been such a cause of frustration. Again, none of this will happen overnight, and probably not until the end of the current round of CAP reform.
What will this mean for Europe?
Their stock markets have been shaken as much as those of the UK, and there will be some serious soul searching in Brussels. Undoubtedly there will be pressure for referendums in some other countries and momentum may start to build towards seismic changes there. Right now, we are at an impasse as to when “the divorce papers” are served, which is perhaps adding to the atmosphere of mutual frustration. And of course the whole issue has become embroiled in UK party politics notwithstanding that it was a cross party amalgamation of voters who opted for “out”.
If you have any immediate Brexit questions please email us or send enquiry as we are interested in discussing this with you.