A look back at May’s Brexit speech: What does it mean for the trade?

As we hurtle towards the hard Brexit scenario outlined by Theresa May in her speech earlier this week, there are two main concerns affecting our industry: the impact of leaving the single market and the issue of restricted immigration affecting the vast numbers of workers needed to keep the cogs of our world class hospitality industry turning.

Both were addressed by May’s speech in which she delivered a long-awaited assurance that EU citizens already living in the UK will be guaranteed the right to continue living in their place of work – cue a collective sigh of relief from employers and employees alike.

At the same time, May made clear that her proposal, “cannot mean membership of the single market”, and confirmed that she will instead seek “the greatest possible access to the single market, on a fully reciprocal basis, through a comprehensive Free Trade Agreement”.

Economic institutions have reported that the markets responded favourably to May’s speech, indicating that any sign that we are moving away from the much talked about “uncertainty” that has plagued conversations about Brexit since June 23, is better than nothing at all – even if that certainty means leaving the security of single market behind.

Scepticism still abounds as to whether May can achieve what she outlined in her speech, one of which is her assertion that she no longer wants the UK to be bound by the Common Commercial Policy or the Common External Tariff - both of these are parts of the single market’s trading bloc’s Customs Union which stops the UK from negotiating our own trade deals with the rest of the world.

She does however, want the UK to broker a customs agreement with the EU which could mean becoming “an associate member of the Customs Union in some way, or remain a signatory to some elements of it.”

May says she has “an open mind”.

Others might say it’s a case of having her cake and eating it too.

Regardless of what happens, May’s 12-point Brexit plan clearly outlined a desire to open up trade with the rest of the world, looking to expand the UK’s global horizons with countries like India, China and the US – all of which are major economies and increasingly relevant markets for the UK drinks trade.

Miles Beale, chief executive of the WSTA welcomed the opportunity to achieve “free-tariff success away from the single market”.

But while talks about bilateral trade deal talks have already begun with countries like New Zealand, what shape May’s “comprehensive Free Trade Agreement” with Europe will look like is currently anyone’s guess.

On the subject of immigration, Ufi Ibrahim, chief executive of the British Hospitality Association (BHA), said this week that hospitality is likely to be the sector most seriously disadvantaged by changes to immigration rules arising out of Brexit.

While May said that “our vote to leave the European Union was no rejection of the values we share. We will continue to be reliable partners, willing allies and close friends”, withdrawal from the single market will give the UK more flexibility over its borders.

Ibrahim responded by calling on the industry and government to do more to ensure that EU migrants continue to be welcomed into our country.

As well as calling for a 10-year timescale to provide employers more time to adapt to the planned curb in immigration, Ibrahim said: “The impact of Brexit on labour shortages does not apply only to the technology and science industries but also sectors such as care and hospitality and tourism. Without EU workers our industry will be unable to welcome visitors from home and abroad and keep the UK going.”

With no date yet set for Article 50 and any finalised trade agreements still a long way off, uncertainty will continue to fuel worries about the present and future.

As we have seen, timeframes for an EU trade deal will be determined as much by politics as economics and it remains to be seen whether the EU will play hardball with the UK government to discourage other states from leaving the bloc.

In her speech, May said that a punitive deal would be unacceptable and “an act of calamitous self-harm for the countries of Europe.”

In a statement to the rest of the world as much as to the UK, she said that the UK’s vote to leave the UK was a vote to restore “our parliamentary democracy, national self-determination, and to become even more global and internationalist in action and in spirit”, but also wants us to remain “neighbours and friends”.

One way we can certainly look to achieve this is through trade.

It is certainly encouraging that countries are offering olive branches to the UK - including Trump who recently assured us we “weren’t at the back of the queue”.

As an industry, we just have to make sure our arms are open wide to the approaches and opportunities that come our way.

 

 

Readers' comments (1)

  • A concerning time for everyone, and not just in the UK!

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