Whichever way you are leaning in the EU referendum, the polls must be frightening you.
They frighten me. On one hand we have the prospect of remaining – maintaining the status quo half our country apparently find intolerable. On the other hand we could leave, with the other half bereft and the experts eying decades’ worth of work to draw up replacement laws and trade agreements.
We may not know exactly what an exit from the European Union will do to our economy, but it’s is widely accepted (and indeed already true) that the pound will drop and struggle to recover. This is down to uncertainty which is at its height now, but will last for years.
With polls roughly tied with only a few days to go, there is huge uncertainty in the market, and uncertainty breeds economic turmoil. Investors don’t know where to turn, some divest while others simply invest in other, more secure markets. If we leave, the pound will take another knock as the realisation dawns on us how long reworking all our trade agreements and laws, many of which are through the EU, will take. On top of that we lose the bargaining power that being part of the EU gives us – a trade agreement with the UK now means access to the whole of Europe’s market. If we leave that will no longer be the case, and trade and the pound will suffer for it.
A drop in the value of the pound has two main effects. It makes importing more expensive and exporting cheaper. For an importing company like Cave, that’s very bad news. For a brewery with a large export market it might look like good news, but it’s not so simple. Costs of the transaction may go down, but the cost of imported ingredients (hops and malt) and equipment (that fermenter you need) will go up. Even British ingredients could increase in price as farm subsidies from the EU are stripped away. In a sector with such tight margins, it’s a desperately complicated sum to see whether you will benefit at all.
It’s true that, once the laws and trade agreements are settled, the pound might recover. But craft beer is thriving now, so a calm market in a few years time is no good. That fermenter won’t wait when you have customers asking why they can’t get any beer.
Another knock on effect of leaving the EU could be the emergency budget. There is no doubt there will be one, but obviously a lot of debate about what would be in it. Infuriatingly the Chancellor has suggested that alcohol duty should go up by 5% to help plug to gaps left by the weak pound and slower initial growth. This would be bad news right through the supply chain to the drinker.
All this assumes that we actually join the single market and can trade freely with the EU. Joining has a huge membership fee but would be vital to keeping trade moving and keeping bureaucracy at a minimum while we sort out new global trade. Importing and exporting within the EU is absurdly easy, but that is unlikely to be the case from the outside, as other nations have found. We should also remember that, just like Norway, if we wanted to be part of the single market we would have to accept freedom of movement along with free trade. So those looking to reduce immigration through Brexit will find their vote wasted.
As to why we the beer industry would want to reduce immigration I am mystified. Our hop and barley farms rely on seasonal work from outside the UK, as do our bars. Employment rates are at their highest in decades, so it is pure fallacy that we do not have enough jobs for “British” people. Unless there is an amnesty for those already here, we will find farms, restaurants and even breweries hugely understaffed and in many cases missing highly skilled workers. How many brewers employ Belgian, Dutch or German brewers? I lose count.
The craft beer industry as a thriving, exciting segment of the UK economy is a fantastic example of how leaving the EU could tarnish our trade and livelihoods. These examples can be expanded to all kinds of manufacturing and craft industries that rely on the open, honest approach to business. I love how diverse beer is – how varied its people are and how we have used EU laws and systems to compete with companies hundreds of times larger than even our biggest brewers.
In this increasingly globalised world we need to come together, not push ourselves away. We need to build bridges, work together and support each other – as much within the industry as with out. A vote for leave is a philosophical and practical mistake that we in the beer industry should do everything in our power to avoid.
