Brexit – are we any closer to knowing the impact of an in or out? · Latest News · R&BS

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Brexit – are we any closer to knowing the impact of an in or out?

At the end of February we wrote our first blog on the EU referendum and looked at three important questions for the government to answer before we could evaluate how an EU exit would affect UK farmers. These were:

  • the level of domestic farming support (subsidies)
  • the terms and tariffs of access to the EU and overseas markets, and
  • the effect on employment of non-UK born workers.

There are, of course, other factors to consider too notably the heavy burden of EU regulation – would leaving the EU make this any less (or some say maybe even more) onerous for UK farmers?

Have these questions been answered?

The ‘in’ camp have made some commitments to agriculture with David Cameron writing a persuasive letter to the CLAconfirming that during his government’s term he will financially support UK farming and the rural community.

The government has, however, been criticised for not coming out with a plan B for agriculture in the event that the vote on 23 June went in favour of exiting the EU.

The out camp argue that the UK farming industry would be better off if it could shape its own policies and future without the burden of regulation and that the monetary savings made by leaving the EU could be redirected back to farmers. A recent NFU report shows that if the UK exits the EU, successfully negotiates a free trade agreement with EU members and continues to provide farm subsidies then farm incomes will increase across all sectors. However, this is based on unknowns including the government’s future policy on free trade, their success of negotiations on future trade agreements and if they would continue to subsidies agriculture after an out vote.

What do the farming unions say about Brexit?

Farming unions and organisations have all put their views across – NFU (after some time and debate), NFU Scotland, NFU Cymru, the Farmers Union Wales, Ulster Farmers Union and the Tenant Farmers Association have all taken the stance of supporting the UK remaining in the EU.

The CLA will remain neutral but have created a well drafted document summarising the issues from both sides of the in and out campaigns as well as more details on the EU, the negotiation process and the Brexit options. They hope that the policy decision makers will take note and provide a response to the so far unanswered questions. We would encourage you to read The CLA’s Leave or Remain The Decisions that Politicians Must Make to Support the Rural Economy for an in depth look at the issues.

What would happen if we vote to leave the EU?

A YouGov poll on 6 April 2016, indicated that with under two months to go to the referendum the in vote is only slightly ahead with 39% while the out vote is on 38%. The other voters are undecided (18%) or say they wouldn't vote (5%). There is still scope for a swing towards out.

But what would happen on 23 June if the UK votes to leave the EU? The answer is … not a lot immediately and not a lot for at least two years.

The vote can’t trigger any immediate action. We can’t just ‘leave’. After the UK government informs the European Council of their intention to leave the EU, there will follow a period of at least two years of negotiations between the UK and the 27 countries who will remain members of the EU. 19 of these countries (72%) must agree to us leaving.

This is the formal process as set out in the Treaty of Lisbon. HSBC commentators believe that the government and EU timetables would be negotiated so that Britain would not formally leave the EU until 31 December 2020.

Will the UK's power help negotiations?

The Brexit vote is being permitted as there has been growing dissatisfaction with the EU and all that goes with it, and the UK people are being given a chance to voice their dissatisfaction.

We are the fifth largest economy in the world and the second largest in Europe and as such are important to the EU. We had the power to negotiate keeping our currency and join the EU when all the others complied with the euro. This speaks volumes. If, by voting ‘out’, we send a clear message to Europe then, if the mechanisms allow, the government can perhaps spend the next few years renegotiating terms that favour the UK and put us in the driving seat with greater influence than we ever had before.

What next?

The outcomes of an out vote for the economy as a whole and for UK agriculture are still unclear. The nation and farming community are still divided. Whatever the result on 23 June, we can only hope that our farming unions continue to lobby government for answers and then for support, to ensure that we get the very best outcomes for the future of our UK farming industry.

But whether the government sees the farming industry as a priority over the NHS and other services and industries in any outcomes or negotiations, now that’s another unanswered question…

To prepare your business and your finances for any outcomes of the EU referendum, please give us a call or email us.

North: 0800 781 1822  South: 0800 781 0639