The new food and drink export figures seem to be, on the whole, rather good news.
In the first half of the year, exports to the EU saw a major jump and now sit just a slither behind their 2019 – pre-Covid, pre-Brexit – levels. Exports grew of almost all Britain’s most popular products, from whisky to lamb, and in many cases by double-digit percentage points. Crucial global markets such as the US, Japan and India are now buying more British food and drink than ever.
This final point, in particular, is noteworthy and should reassure food and drink exporters that when it comes to trade deals, their priorities are broadly aligned with the UK’s trade department.
Sales to India, for example, surged 81% in the first six months of the year compared with 2021, taking it into the top 20 export markets for the first time. Whisky was the main propellent of this growth, in spite of a 150% tariff that makes it significantly more expensive than Indian whiskies.
A key opportunity to continue this surge may arise if the UK is able to conclude negotiations on a trade agreement with Delhi in October, as is hoped. India’s prohibitively high tariffs, which average 34% on all food and drink, could be slashed.
The UK’s ongoing talks with the Gulf Cooperation Council, made up of six countries including UAE, Saudi Arabia and Qatar, could also help propel the food and drink sector to further growth. The UAE alone is the UK’s 14th biggest export market for food and drink, with total sales up 30% in the first half of the year. Just like India, there will be hopes of the tariffs on food and drink – 25% on cereals, 15% on chocolate – being slashed to enable further growth.
When it comes to trade agreements that can significantly boost trade, however, the priority for many food and drink companies will still be the EU. While a deal is now in place, this is not a static agreement and many hope further clauses can be added to help smooth the process when shipping goods to the single market.
While exports to Europe have jumped this year, this is largely due to stockpiling in 2020. Businesses didn’t export in the first few months of last year to allow time for the new trade arrangements to settle down.
Now, total exports are broadly flat compared with five years ago, in stark contrast to the dramatic rise in sales to other global markets. While this is more than likely to grow further and outstrip pre-Brexit sales in the near future, there will still be those who argue sales have been lost that can never be recovered.
After all, Brexit was never going to lead to a net reduction in sales volumes. The EU’s growing population and wealth will mean British exports will continue to grow. The argument is rather that they will fall below what they might otherwise have been, were the UK in the EU. Exactly by how much, however, it’s impossible to say.
As we verge into hypotheticals and counterfactuals, the arguments become tricky. What we can say for sure is that EU and non-EU sales are recovering and new trade agreements could boost things further. Given the troublesome times of the past few years, that’s probably not a bad place to end.