Brexit deal offers an ‘inferior scenario’ to EU membership, say drinks manufacturers

10-Dec-2018 - Last updated on 10-Dec-2018 at 10:29 GMT

Anxiety: drinks manufacturers including Diageo told MPs they believed they would be worse off under Theresa May's Brexit agreement

Drinks manufacturers have described the proposed Brexit Withdrawal Agreement as offering a “scenario inferior” to the status quo of EU membership.

However, businesses said the “uncertainty and damages” associated with a no-deal scenario meant there was support for the Government’s agreement.

Leaving the EU without a deal would be catastrophic for the processed food and drink sector, businesses told the Business, Energy and Industrial Strategy (BEIS) committee.

The report, titled The response from business to the Withdrawal Agreement and Political Declaration, outlines concerns over access to the EU workforce, frictionless trade and potential tariff increases.

Chair of the cross-party committee Rachel Reeves, Labour MP for Leeds West, said: “Businesses were clear that the deal on offer is inferior to what they currently enjoy as part of the single market and customs union, with supply chains built for maximum efficiency using frictionless trade across Europe.”

A desire to avoid a no-deal Brexit has led to support for the agreement from companies, but they “are under few illusions" about its benefits, Reeves added.

Firms dubbed the Government’s Political Declaration as ambiguous and “a list of aspirations rather than a blueprint for a future relationship,” she said.

Ambiguity over trade

Spirits’ producer Diageo said it was concerned over the ambiguity of future trading agreements, in particular the status of third-country Free Trade Agreements (FTAs) organised through the EU.

Dan Mobley, corporate relations director at Diageo, described the brand's uncertainty over whether tariff barriers would be raised on its exports to countries including South Korea, Colombia and Mexico.

Representatives from the food and drink industry were pleased with “references to retaining geographical indicators that will protect the integrity of Scotch, gin, Irish cream and other products they sell around the world”, in the political declaration.

Workforce anxieties

However, businesses agreed the Prime Minister’s proposed changes to the immigration system would exacerbate workforce shortages.

The Food and Drink Federation described its sector’s dependence on European labour as “from farm to fork”, and Diageo said its suppliers were already suffering a workforce deficit.

Businesses were worried a transition period would be “used up” by another period of negotiation, with fears the time would merely defer a chaos of ‘no-deal’ to December 2020.

The report comes the day before a critical vote in the House of Commons on the Government’s agreement.

The committee also consulted the aerospace, automotive and pharmaceuticals industries.