Brexit Fears Cause Problems for the UK Drinks Trade
Posted on Wed 21st Jun 2017 at 11:44
Thanks to fears that Britain may decide to leave the EU on 23rd June this year, exchange rates are plummeting. This is bad news for everyone – from bankers to those who just want to go on holiday – but few have grasped just how serious it is for the UK wine trade.
With the vast majority of the wines we drink coming from overseas, wine importers are struggling to adapt to the new cost of products from Europe and the Americas. This is because the pound has fallen from €1.40 to the pound to around €1.25, and also fallen in value against the dollar, which is used to purchase wines from both North and South America. If voters choose to leave the EU this June, there are fears that the pound will be further devalued. This would leave both importers and exporters of wine with some tricky decisions to make. At present, most in the trade are seeking to protect consumers by not passing on the effects of the devalued currency. How long this can last, however, is another matter. The currency effects are just one reason why 90% of the Wine and Spirits Trade Association membership are backing the Remain campaign. As CEO Miles Beale said: “While all views were represented in our membership the vast majority is clear that the industry will better be able to invest, grow and create jobs if the UK remains in the Single Market.” With the voting deadline looming, it is hoped that the wine trade can withstand the effects of uncertainty until 23 June, when the desired outcome will hopefully be achieved. Business owners are being advised, however, to start contingency planning in case Britain does vote to leave the EU this summer.