Spotlight: should pubs be worried about a no-deal Brexit?

Deal or no deal? A question Noel Edmonds asked contestants on his Channel 4 gameshow, and now one that is on the minds of millions of consumers, business owners and politicians concerned about the consequences of Brexit and how the negotiations are going.

And, like the contestants who were presented with a Velcro-sealed red box, the nation is, as yet, unsure if we will walk away from the EU with a good deal, a bad deal – or any deal at all.

While some of the concerns of industry insiders abated during 2017, from the fate of EU nationals in the UK to post-Brexit drinks sales, others are still divided over what a ‘good’ or ‘bad’ Brexit deal would mean for the pub industry as we enter 2018.

In December, trade bodies warned MPs investigating the impact of Brexit on the food and drink industry for the Business, Energy & Industrial Strategy Select Committee that an “orderly” Brexit was needed, warning a bad deal would be “catastrophic” for the trade.

However, JD Wetherspoon chairman Tim Martin claimed this was “misleading”, and says a no-deal Brexit would be good for pubs.

We asked industry leaders which issues remain a concern and what they think a ‘no deal’ could mean for pubs across the country.

A lot more work to do

Association of Licensed Multiple Retailers (ALMR) chief executive Kate Nicholls praised the Government for making some “positive moves to bring stability and clarity” over Brexit.

Moving into 2018, there are three areas the ALMR plans to concentrate on, however. These are “people, the supply chain and regulation following the withdrawal”.

“The Government has made a clear commitment to EU nationals, outlined its plans for post-Brexit trade and is working with the Migration Advisory Committee, recognising the demands being placed on businesses,” said Nicholls.

“This year, we want to see the Government make continued progress on post-Brexit regulation and taking advantage of the opportunities that Brexit will present; specifically with a tax system that lowers costs and supports growth and investment across the hospitality sector.

“Our preference for Brexit remains a comprehensive deal with a transition period to allow a smooth withdrawal.

“In the event of no deal, the Government must stick by its current settlement on EU citizens and take positive action to unilaterally reduce tariffs on food and drink.”

The British Beer & Pub Association (BBPA) also welcomed the Government’s progress in trade talks over the past year.

“There is no doubt that there is a lot of work ahead to ensure more certainty for businesses,” said chief executive Brigid Simmonds.

“In phase one, there has been progress on rights for EU employees, and we need to see this nailed down, to end any uncertainty for our valued staff.

“Priorities ahead must be securing skills for the hospitality industry in-cluding a review of the ‘Tier’ system and extension of the Youth Mobility Scheme to the EU.

“We need to ensure there is access to the soft skills needed for the hospitality industry and also a competitive tax regime for beer, if we are to make the most of export opportunities.”

She added: “On a no-deal Brexit, I understand the need to prepare for all possible outcomes but, undoubtedly, a transition period and a comprehensive agreement that allows trade to continue as freely as possible is the best outcome for the beer and pub sector, and the wider business community.”

Uncertainty over EU workers

While an agreement has been made over the rights of the millions of EU citizens living in the UK, some are still concerned that it won’t be enough – and that potential workers will also now be put off from coming to the UK altogether.

Fuller’s chief executive Simon Emeny said: “While we have seen the Government make a level of commitment to our current team members from the EU, and while we think there is a chance that 2018 might prove to be better than many fear, people are still our biggest challenge.

“Despite the commitments made, there is no doubt that the UK is no longer such an attractive proposition thanks to a combination of the less favourable exchange rate and the general feeling that the UK is not so welcoming to our EU neighbours.

“We have to attract more homegrown talent – but it will take a generation to change attitudes towards a career in hospitality.”

Figures would suggest Emeny is right to worry. In December, research showed that despite the UK remaining the most popular country among Europeans looking to work abroad, its lead is “eroding fast”, raising concerns that as a direct result of Brexit, filling jobs in hospitality could become increasingly difficult.

“The agreement may not be enough,” Emeny warned. “This is about hearts and minds, not just legal wrangling.

“If we aren’t attracting the same level of EU national who wants to work in our sector, we need to reach out to young people across the UK – and one of the biggest barriers is the parents and grandparents of potential recruits.

“We need to pull together and show them the rewarding careers that exist in the pub sector.

“With regards to our EU colleagues, at Fuller’s we highly value the contribution they make to our business – they are our friends as well as our colleagues and we have committed to paying the permanent residency fees for any eligible EU national who has been with us for more than a year.

“In addition, we continue to look for ways to ensure we are still an attractive proposition to EU workers and we are constantly investing in development, reward and recognition programmes for all our team members.”

Commenting on a ‘no deal’ outcome, Emeny said: “Uncertainty is never great for business – but the pub industry is robust and will adapt and deal with whatever circumstances are thrown our way.

“However, given the choice, I would prefer to see a workable deal in place prior to our departure from the EU next year.”

Even JD Wetherspoon’s Martin told The Morning Advertiser​ his biggest concern about Brexit for the pub industry is its people. “The main worry for the trade relates to the availability of migrant staff,” he said.

“In this area I feel that a sensible level of immigration does indeed benefit the economy.

“However, New Zealand, Australia, Canada and Singapore, for example, all have robust levels of immigration – and they are obviously not in the EU.

“The licensed trade can make a good case for liberal immigration policies and we shouldn’t have to rely on the undemocratic EU to come up with the answer in this area.”

No deal – ‘no worry’

Where others have erred on the side of caution in relation to a ‘no deal’, Martin said he “strongly believes” that pubs would be “better off” without a deal with the EU.

“This is because the EU, and therefore the UK, currently charges taxes or tariffs on food imported from the 93% of the world that is not in the EU,” he said.

“If we leave the EU without a deal in March 2019, the UK parliament has the power under World Trade Organisation rules to eliminate tariffs on non-EU food and drink imports, which would mean that food imports from the EU would continue to be tariff-free, as they are today.

“Wetherspoon has calculated that our costs would reduce by about 3p per meal – and Aussie and Kiwi wine imports, now subject to tariffs, would become cheaper too. All pubs would benefit, not just ours.”

He added: “In summary, no deal equals the best deal for the UK unless the EU negotiators take a wise-up pill and offer us sensible terms.”

The predictions of most industry bodies is that 2018 is going to be tough for the trade. From Brexit, to business rates, to changing consumer demands.

But, it looks like the fight for the future of great British pubs is as strong as ever.