IGD - Economics bulletin 15 June

15 June 2021

Your overview of political and economic news with a focus on the food and consumer goods industry, featuring the latest developments and guidance on COVID-19 and adapting to a new relationship with the EU.

COVID-19 unlocking delayed

Yesterday the Prime Minister announced a 4-week pause at step 3 of the roadmap out of lockdown. The government previously stated that 21 June would see the end to in England. However, in view of concern over new variants, some restrictions will now remain in place until 19 July.

The government continues to advise home-working, wherever possible, rather than travelling to a workplace. For food and drink businesses specifically, the major impact is likely to be on hospitality venues and the provision of banqueting type events (eg: weddings) where some special measures still apply. Updated guidance is available online.

See also the latest on restrictions in Scotland, Wales and Northern Ireland.

Surge testing – communications support for workplaces

Surge testing and strengthened support measures continue to be provided in areas where COVID-19 variants of concern have been identified.

Communications support for workplaces in areas undertaking surge testing and where strengthened support is being provided is available from NHS Test and Trace.

Furlough support winding-up

From 1 July the Coronavirus Job Retention Scheme (CJRS or “furlough”) will begin a period of planned winding-up. At time of writing, there is no indication that furlough measures will be extended, despite the postponement of full “unlocking”.

As at 30 April, the latest date for which figures are available, about 900 000 people in the UK were supported by CJRS, especially in hospitality, accommodation, travel and recreation roles. Around 11.5m have received support at some point during the pandemic.

Labour shortages

Labour shortages remain a significant concern for many UK food and drink businesses. IGD contacts report a chronic shortage of HGV drivers – this predates EU Exit, but has become more acute in recent months as COVID-19 restrictions have been lifted.

The Road Haulage Association (RHA) has urged government to act, providing a 12-point plan, which includes a mix of short-term and long-term measures.

Australia trade deal agreed

The Prime Minister has announced that the UK has secured a trade deal with Australia eliminating tariffs on all UK goods. The main elements of the deal were agreed at a meeting on 14 June and a final Agreement in Principle will be published in the coming days.

When confirming the deal the government noted that British farmers will be protected by a cap on tariff-free imports for 15 years, using tariff rate quotas and other safeguards.

UK/EU Partnership Council meeting

The UK/EU Partnership Council met in London for the first time on 9 June. Discussion focused on operation of the Northern Ireland Protocol, especially with regard to movement of agri-food goods.

The communique issued by Lord Frost, the UK Brexit Minister, suggests that little substantive progress was made on these issues, although talks remain open. The corresponding communique from Maros Sefcovic, the European Commission Vice-President, suggests that the EU remains committed to the Protocol as it has been agreed, with little enthusiasm for change. Mr Sefcovic also warned explicitly that the EU would act swiftly, in the event that the UK does not keep to its treaty obligations.

In other areas there appears to be progress, for example, fishing catch limits for 2021 have just been agreed by the EU and UK.

Latest UK/EU imports and exports data

The latest trade data from the Office for National Statistics shows that food and drink imports to the UK from the EU remained below historical levels in April 2021, presumably as a result of EU Exit. UK exports to the EU seem to be performing better, although the UK remains a net importer of food and drink.

G7 meeting concluded in Cornwall

Leaders of the G7 nations met in Cornwall at the weekend, accompanied by guests from other nations. In their final communique, leaders undertake to end the COVID-19 outbreak in 2022, with special efforts to improve surveillance and increase access to vaccines in the poorest countries.

Leaders also promised to build preparedness for future pandemic diseases and to address the issue of antibacterial resistance. Leaders reiterated their commitment to green policies, especially the commitment to halve greenhouse gas emissions by 2030 and to achieve net zero by 2050.

Other issues included rebuilding public finances and developing taxation frameworks in order to manage the taxation of global businesses (an issue already explored by G7 finance ministers). International trade was discussed, with emphasis on protecting workers from bad labour practices. Managing the international digital economy was also discussed.

Animal Welfare Bill

As promised in the Queen’s Speech, the government has now introduced two new pieces of legislation, part of a body of new law intended to improve animal welfare. The Animal Welfare (Sentience) Bill provides no protections in itself, but will require future government policy to account for the “sentience” of all vertebrate creatures. The Animal Welfare (Kept Animals) Bill introduced to the House of Commons last week contains several measures – most important for the food industry is a ban on the export of live animals for fattening and slaughter.

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