NESTLE, BREXIT AND JULIAN STURDY

Nestle's recent announcement of 300 job losses is not, they claim, a result of Brexit. This may well be true and there is no evidence leaving the EU had any part in the transfer of Blue Riband production to Poland. I don't think there is any doubt Polish manufacturing costs are cheaper so it was probably purely a business decision. Julian Sturdy was on television naturally playing down the possibility that Brexit was in any way involved but he admitted there was a lot of uncertainty ahead.

What may not be appreciated is that if we exit the EU without a trade deal in place and we are not in the customs union, tariffs will be applied. The EU tariff on confectionery products is 31.6% according to Civitas (HERE page 10). Confectionery exports to the EU are worth £310 million and this will be severely impacted by high tariffs.

Imports are worth £719 million and if we apply the same tariff, the price of European confectionery will probably rise here but if their manufacturing costs are lower, as they certainly will be in Poland, I assume their imports could be more competitive in Britain even with tariffs than UK products would be in Europe. York therefore may be one of the biggest losers. And to see what difficulties being outside the customs union will bring, this blog (HERE) by a former WTO employee says the EU used to classify confectionery, biscuits, etc into 27,720 categories but have now reduced it to a mere 13,608!

Nestle's workers in the UK need a trade deal and tariff free access to their biggest export market otherwise the 300 jobs losses announced this week will not be the last. Julian Sturdy, assuming he gets re-elected, had better pray they get one because if not, we will be pointing the finger directly at him.

Brexit is expected to impact confectionery worst of all packaged foods, according to Confectionery News (HERE) because they tend to be discretionary purchases and are expected to decline 0.2% every year up to 2020.