Comment: UK Brexit pot boils over

UK Brexit

Like many others, I’ve been following the UK Brexit drama as the watched pot boils over and the timer runs down at a critical time for the red meat sector. With the fast-moving events in Westminster, it has been a difficult to pin down a post on the topic, but here goes …

Judging by comments I’ve received from friends and former colleagues in the UK, the British public are bewildered by what is happening in their Parliamentary debating chamber. Outrage from MPs and their constituents at the ‘proroguing’ – or suspension of all parliamentary business – in the run up to Brexit and the prospect of crashing out with a No Deal, for which the majority feel the Cabinet has no mandate, has resulted in the Conservative (Tory) government losing its Parliamentary majority and a defeat for new Prime Minister Boris Johnson.

What all this means for New Zealand exporters has been spelled out helpfully by Tradeworks’ latest blog post: ‘Trading into uncertainty: two months to Brexit”.

“All in all, the potential shockwaves of a no-deal outcome mean that many in New Zealand will continue to watch this space very closely,” writes Stephanie Honey.

Since that post was written, it’s been a busy and fractious week on Speaker John Bercow’s agenda. At the time of writing – and things could change of course – a bill to prevent a No Deal swiftly passed through the House of Commons on Wednesday and went through the upper chamber of the House of Lords, gaining their approval for it to pass through all stages, including heading towards the Queen for Royal Assent, which it will probably do early next week. The PM has not gained a two-thirds majority he needed to call the election he wanted on 15 October. Once the Bill has passed, however, the country will very likely head to the polls, but most probably not on Johnson’s preferred date. Another extension to Article 50 could be possible, though Johnson says he “would rather be dead in a ditch,” and will add more uncertainty for all.

An election could possibly result in Johnson’s tenure being the shortest ever for a British PM. If one does happen, a likely surge for the new Brexit Party will split Conservative votes and others will drift away to the Liberal Democrats. The Labour leader Corbyn may be successful, if he can unite voters and a coalition behind him which is a very long stretch. Bubbling away on one of the back-burners, there is also a suggestion for a post-war like short-term coalition Government of National Unity to be put together. This would be aimed to guide the country towards an agreed Brexit resolution and possibly be headed by veteran former Conservative MP (as he’s just been withdrawn from the Tory whip, along with 20 colleagues) Kenneth Clarke, or Labour MP Harriet Harman, both of whom are close to retirement but would be highly respected and popular choices.

So, it’s not No Deal … yet … at the time of writing, but it is all very uncertain and the devil will be in the detail, which it is not clear has been worked out.

It was interesting to hear, after the Brexit debate, British Agriculture Minister George Eustice responding to questions from opposition Welsh and Scottish MPs in a far more sparsely attended session in Westminster about how the British government intends to safeguard British farmers’ businesses in the event of a No Deal Brexit. He said the UK government was well aware that the sheep sector is more exposed than any other sector. He acknowledged British exports to Europe will face higher tariffs and, in the event exports are not possible for British lamb producers, that the extra quantity on the domestic market would have the effect of bringing domestic prices for lamb down. He also referred to the split tariff-rate quota that he inferred would restrict the quantity of New Zealand lamb that could enter the market.

“In a no deal scenario we will have to show some solidarity with the [British lamb] sector,” he said, giving reassurance to the UK sheep industry that the British government will make interventions to support farmers’ incomes.

“The scale or need for that intervention will be entirely dependent on the EU response,” he said, adding culling sheep is not under consideration. The preference is to keep the flock numbers up, as: “We have, we believe, a bright future for our sheep sector.”

While the lamb market is unlikely to be foremost on the current Cabinet’s minds, however, it will be on many minds here – and our government’s – particularly as we move towards the chilled lamb season, when New Zealand lamb helps to keep lamb on retail shelves in the UK during the off season for the British product.

New Zealand’s sheepmeat exports to the UK were worth $416.9 million in the year ending 2019, but these days account for only 11 percent of total shipments worldwide of the product. It is coming up to a critical time for just over half of those consignments, chilled lamb.  Keeping a close eye on the ball to avoid being caught in the middle is critical for the New Zealand red meat sector’s Brexit representative Jeff Grant and other New Zealand government personnel working in and on the market. Avoiding that Brexit fatigue will be key for exporters too, who will be among those companies spending billions on No Deal planning until it is definitively ruled out.

The clock is ticking. The important dates in the current timeline, again at the time of writing, are:

  • 3- around 12 September – Debates in the UK parliament, the Prime Minister’s office works on Brexit plans
  • 13 September to 13 October – Parliament suspended, PM’s office work continues on Brexit plans
  • 14 October – Parliament returns for the Queen’s Speech and debate on the Government’s plans
  • 17 October – EU leaders meet for final Council summit before Brexit
  • 31 October – Current Brexit date.

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