‘Britain could find it difficult to reach trade deals with countries outside the EU’
The man who represents Britain’s food and drink manufacturers has warned that the UK may find it harder to reach trade deals with countries such as New Zealand than many suppose.
Ian Wright, director general of the Food & Drink Federation, also said there were concerns in the sector about the impact of Brexit on its workforce, with more than one in four people working in the industry being an EU national from outside the UK.
Speaking to the Western Mail while on a visit to Cardiff, Mr Wright said: “There’s an assumption that New Zealand and Australia are gagging to do a trade deal with us, but actually for both of them the last 40 years have meant for them that the mainland European market is much more important to them than the UK. So they’re going to have to weigh up – are there downsides from just doing stuff with the UK?
“I think it’s fanciful to assume they’re not going to make those calculations. There may be points where there are advantages, but they won’t all be in one direction.”
The importance of the EU to Welsh food and drink exporters is shown in the figures. In 2015 the EU market accounted for 87.9% of exports from the sector, with a total value of £232.3m. Exports to non-EU countries were worth just £31.9m.
Mr Wright said it would take years to agree new trade deals and that the Government should focus on a transition agreement with the EU, adding that it had “some good cards to play”.
He said: “The free trade deals other countries have done with the EU all include the UK with its 65 million people and vibrant consumer market. Those third parties will want recompense or to renegotiate, because they’re losing 10% of the market [when the UK leaves].
“So I think the EU will come to a resolution that they’ve got to have us in there as much as possible.”
The Food & Drink Federation recently set up a new Welsh operation called FDF Cymru. Food and drink, along with agriculture, is a priority sector for the Welsh Government, which is targeting an increase in turnover for the industry from £6.1bn to £7bn by 2020.
There are more than 223,000 people employed across the food and drink supply chain in Wales, from agriculture to manufacturing, and processing to catering and retail.
Mr Wright said that the food manufacturing sector faced a “ticking clock” with 130,000 employees out of 400,000 in the UK aged over 55.
“Before the Brexit vote, we would have assumed that the shortfall would have been disproportionately made up from European workers coming,” he said, adding that the fall in the value of the pound since last June’s vote had removed that hope.
“A lot of them are here to send remittances home. They’ve seen a 20% reduction in the value of their wages, so there’s an incentive for them if they can find work in mainland Europe to do so because they will make up the difference in the loss of their wages.
“And clearly there’s a problem for employers to bring replacement workers over because salaries are already 20% lower than they would have been otherwise,” he said.
He added that the insecurity for EU workers of not knowing what their future status would be was also acting as a disincentive.
“I understand the Government’s problem about giving a guarantee before it can know what’s going to happen to British residents overseas,” he said.
“The difficulty is, if you look at the numbers, there are about four million European residents in the UK and they’re predominantly under 50 and in work. There are about 1.9 million British residents [in Europe] and they’re predominantly over 60 and not in work.
“Moreover the EU workers in the UK are broadly drawn from eastern Europe and the Brits overseas are almost entirely in Spain, Portugal, France and Italy.”
Mr Wright, who worked for 14 years for drinks company Diageo, added: “I think in the short term the Government will have a seasonal agricultural workers’ initiative from which we will also benefit, because some of those people come over to do the harvest and then they will take roles in the pre-Christmas packing of products.
“On the other side, they will give a very large number of temporary visas, largely on the model of the Commonwealth visas that are allowed now, with possibly a fiveyear time limit and employer contributions to access health services.”
He added: “I think it’s important for employers to understand that this will be employer-policed, which