The UK’s historic vote to leave the European Union will likely lead to price pressures from higher import prices and trade barriers, as well as wavering consumer expenditure in the face of economic uncertainty.
This is the prediction of market researcher Euromonitor International, which examined the potential impact of Brexit on consumer packaged foods in a recent report.
The UK is the EU’s second largest economy behind Germany, and the EU’s largest consumer market.
Euromonitor predicted real GDP growth in the UK to sink two per cent over five years, with the greatest impact felt in 2017.
It said real GDP would not return to growth until 2023.
Within the EU’s packaged foods industry, the UK is the second largest consumer of biscuits, snack bars, chocolate confectionery, according to Euromonitor data.
Declining sales, it predicted, will first affect these “discretionary” purchases.
In contrast, sectors least impacted are staples such as rice, pasta, and noodles.
Still, Euromonitor predicts Brexit's impact to most global markets to be “broad but short-lived".
With the exception of EU countries, China, Saudi Arabia, and Egypt, the market researcher expects for the most part that “the depth of the impact will not be significant” to other global markets.
Australia's opportunity
The process of moving towards an Australia-UK FTA with the EU has been slowed down by news of Brexit, but there appears to be a long-term opportunity with Australia’s agri and wine sectors.
These sectors are currently experiencing high tariffs in the EU.
Brexit provides the opportunity for Australia to negotiate a more focused and beneficial FTA with the UK.
The UK would potentially look to Australia with keen interest to optimise its access to Asia through existing agreements such as ChAFTA and JAEPA, KAFTA.
