The day after Brexit, there are those who are alarmed and those who throw water on the fire. Some try to foresee scenarios and some even go as far as daring to predict an economic forecast. On the day that marked the exit of the United Kingdom from the European Union, many statements and comments were made about the outcome of the referendum that upset all predictions. We picked a few that we believe better represent the sentiment behind this momentous fact and that concern our agri-food exports. In the short term, the only real threat is the depreciation of the pound, which will make our goods more expensive unless companies are willing to offset the negative fallout by giving up part of their margins. At least in the near future, there will be no duties. However, once the withdrawal process has been completed, the WTO duties should be applied unless a better agreement, which everyone hopes for, is reached.
15% OF OUR EXPORTS AT RISK – Prometeia, a company specialized in economic analysis and forecasting, tried to assess the impact on exports. If the standard WTO duties are applied (around 15%), in the worst case scenario, the food industry could lose 450 million euro, in other words, 14% of the domestic sales recorded in 2015; a major backlash that could be aggravated by the devaluation of the pound.
FEDERALIMENTARE: A STRONG ITALY, MAY THE EU LEAD AGAIN – the President of Federalimentare Luigi Scordamaglia, on the contrary, despite all this uncertainty says that “Italian agri-food exports to the UK will continue to grow, and the EU agricultural policy will only get stronger with the withdrawal of a country that often objected to an improvement of the product standards, something Italy has always advocated for.” Nevertheless, Scordamaglia did not spare the European institutions criticism, “The harmonization of the food industry regulations has led to the creation of a single market,” adds Scordamaglia, “however, lately, this has been gradually subsiding, giving way to national regulations, exemptions, and derogations which were permitted by a Commission that is unable to make a decision. Brexit is the result of a weak and hesitant Europe that, instead of proceeding with determination towards an even closer political and social integration, managed, in the hope not to upset anyone, to take two steps back for every single step forward.
WINE AND CHEESE, THE SECTORS THAT RISK MORE – The wine sector is the one with the greatest concern: Sandro Boscaini (President of Federvini) explains that, “The UK is for Italy the third country for export and, in light of what has happened, we are facing a real and tangible risk to see a redefinition of market shares and key players at a time when our country has achieved important results in terms of value-recognition of Italian wine abroad.” A view shared by Coldiretti, which notes that nearly one bottle of prosecco out of three is exported to the United Kingdom, a trend that might change due to the recent developments. In 2016, Britain became the world’s first market for prosecco, achieving a record 38% increase in the first quarter of the year. Wine could be hit by higher duties, as much as 30% of the product’s price, something that clearly scares manufacturers. Even the cheese industry could be heavily affected by the UK’s farewell to the EU.
