06/03/2019

With only one month to go before the UK is supposed to leave the European Union, what complications are we expecting to see across the FMCG sector?

Brexit has created an uproar among all sectors, with automotive, financial services, chemicals, plastics, and food & beverage being some of the most impacted sectors. This large hit is due to the impact on the supply chain caused by potential changes in trade arrangements between the EU and the UK. There are key concerns about the impact on the bottom line, how restrictions on freedom of movement of both people and goods will affect supply chains, and how new import duties will alter the share of wallet.  

The UK currently imports one-third of the food it consumes from Europe as well as having the highest share of EU migrant workers compared to any other UK sector with around one-fifth of the two million EU nationals working in the food and drink industry. Until the UK leaves the EU, all EU employment laws continue to apply as normal. Unfair dismissal, statutory redundancy pay, national minimum wage and most trade union legislation will be unaffected.

With the value of the pound dropping after the Brexit vote, inflation in the UK escalated from around 0.5% to over 2.5% making it more difficult to purchase goods in the Eurozone. In addition to this, existing the customs union with a tax barrier would bring price increases straight to consumers and therefore lower demand for FMCG’s.

With Brexit threatening to leave a shortage of supply chain workers and higher purchase costs for consumer goods, is the country prepared for the complications and potentially catastrophic impact on the FMCG sector if we leave the EU with a no deal?