United Kingdom Agribusiness Q4 2019
UK Prime Minister Boris Johnson has taken a harder stance towards Brexit than his predecessor, Theresa May, which hasincreased the likelihood of a ‘no deal’ Brexit. Having said that, a deteriorating macroeconomic backdrop will encourage thegovernment to push for a deal. Indeed, Johnson continues to attempt renegotiating and May’s deal. We have maintained ourproduction and consumption forecasts for now, but will likely revise them down should the UK leave the EU on October 31 withouta deal. For now, under a 'soft' Brexit scenario, we believe the impact on the agribusiness sector would be minimal. UK farmers wouldcontinue to receive support similar to current EU levels out to 2022, but to be phased out thereafter. The government would alsoseek to maintain 'frictionless trade' with the EU, which would minimise disruptions to UK trade flows and keep food inflationsubdued. Its commitment to not abide by other rules - namely free movement of people – would, however, result in high tariffs onsome agricultural imports and exports, in particular goods that hold high economic value for other EU members. EU regulationspertaining to the environment, food safety and quality and trade would remain largely intact. EU citizens would continue to supplylabour to the UK agribusiness sector in the short term. Longer term, however, EU migrant labour would decline increasing costs forproducers in various agricultural subsectors.
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