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September 28, 2018

Is UK business sleepwalking towards Brexit?

There are signs UK business - including the food industry - are not prepared enough for what Brexit might bring. And the UK government isn't helping, writes Dean Best.

There are signs UK business – including the food industry – are not prepared enough for what Brexit might bring. And the UK government isn’t helping, writes Dean Best.

The entrepreneur behind soup brand New Covent Garden and Little Dish children’s meals thinks so.

And a report issued this morning (28 September) by The British Chambers of Commerce supports that view, with the pan-business body finding nearly two-thirds of UK firms are still not preparing for the country’s departure from the EU.

At an industry event on Tuesday evening in London, John Stapleton, the founder of New Covent Garden and co-founder of Little Dish, told delegates from the UK food industry he believed “the majority of the businesses in the UK are not adequately – or not at all – prepared for life in a post-Brexit world”.

Confusion over what the different kinds of Brexit could mean and uncertainty about the UK’s future relationship with the EU, the pressure of continuing to run a business and even the notion the country may in fact stay in the bloc are all factors that have led British business to be unprepared for what is set to be the biggest economic and political shake-up to have hit the country for generations, Stapleton argued.

“You don’t need to know everything about Brexit in order to make a good start preparing for it,” Stapleton told his audience at a forum held at the offices of UK trade body The Food and Drink Federation. “The real risk lies in a wait-and-see attitude. The real opportunity lies in being prepared.”

Stapleton contrasted the situation in the UK with across The Irish Sea, where state agency Bord Bia is working with food companies in Ireland on what Brexit could mean for their businesses. “Irish firms are much aware of the risks of Brexit and the potential risks of Brexit and, as a result, are much more further prepared to deal with those scenarios when the UK does leave the EU,” he insisted.

Ireland’s more proactive attitude to supporting its food industry was little surprise to your correspondent, having written on numerous occasions about how Dublin has supported its sector in international markets and how UK manufacturers must look on enviously.

Bodies like the UK’s Food and Drink Federation are working hard to try to assist its members as Brexit approaches but what is needed is serious government support for one of the country’s most vital manufacturing sectors. The penny (or euro cent) dropped in Dublin the day after the referendum, now more than two years ago.

Earlier this week, the UK government did issue the latest batch of its “technical” or advisory notices in which it is seeking to outline the possible impact of no deal with the EU. This week’s notices included positions on geographical indications, the labelling of food products and animal health certificates.

Meanwhile, this week, it emerged the UK government had appointed a minister to oversee the protection of food supplies during the Brexit process. David Rutley, a former executive at PepsiCo and Asda, was appointed a Parliamentary Under Secretary of State at the Department for the Environment, Food and Rural Affairs earlier this month.

The appointment follows comments this summer from UK Brexit Secretary Dominic Raab the Government would work with the food sector to ensure the country has an “adequate” supply of food in the event of there being no deal with the EU on Brexit – comments that caused bemusement in sections of the industry.

UK food will take some solace Rutley has experience of working in the industry – but there is no doubt the prospect of a hard Brexit is causing concern across the sectqor.

And those feelings are echoed across the UK business community. The study published by The British Chambers of Commerce found 62% of firms still have not completed a Brexit risk assessment, while a fifth of businesses surveyed (21%) would cut investment if there is no deal, 20% would move part or all of their business to the EU and 18% would cut recruitment. In the event of a status-quo transition, those numbers would fall dramatically, the organisation said.

“Our evidence is clear – failure to reach a political agreement would have real-world consequences, with significant decreases in both investment and recruitment. Larger firms and those active in international trade would suffer the most from a disorderly and sudden exit from the EU, but there will be impacts across the board,” Dr Adam Marshall, director general of The British Chambers of Commerce, said.

“Most concerning of all, a materially significant number of businesses are considering moving part or all of their operations to the EU in the event of no deal. Government must act urgently and decisively to get a comprehensive deal done. They also need to use the levers they have, such as the upcoming Budget, to ensure they provide the right conditions for growth at home.”

At Tuesday’s Brexit event at the FDF offices, Stapleton held up looking for alternative or additional manufacturing as a way for UK exporters to mitigate the worst impacts of a no-deal Brexit, although, having spoken to myriad SMEs recently, finding the right production partner can be a challenge.

That said, challenges are no excuse for inaction. As Stapleton said on Tuesday: “If you’re not ready, you will be caught out.”

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