The signed agreement between the European Union (EU) and the United Kingdom (UK) concerning a Brexit transition period means good news for the continuity of economical activities. It reduced the insecurity about conducting business between the UK and the EU in 2019 and 2020. It also gives companies more time to adjust to the future economic relation between the UK and the EU. Brexit has a large impact on the Dutch ornamental plant cultivation. However, it is hard to predict the size of the impact on the Dutch sales in the UK. This is reported by economist of the Rabobank in their Brexit Monitor, published today.
March 29, 2019 the UK will leave the European Union, and then Brexit is a fact. Rabobank economist Alexandra Dumitru: "The UK and the EU have agreed upon a transition period, running from March 30, 2019 to December 31, 2020. Companies, government and civilians will have more time to prepare for Brexit. The UK will remain a practical part of the European internal market and the customs union."
The agreement concerning the transition period is only a political agreement. Dumitru: "The agreement only becomes legally binding when both parties have signed the entire separation agreement. The main obstacle remains the border issue between Ireland and Northern Ireland. No agreement on this matter means no separation agreement and thus no transition period. A hard Brexit without a deal still remains a risk. In that scenario trade obstacles will rise up immediately."
Consequences Brexit for the Dutch ornamental flower cultivation
In the first edition of the Brexit Monitor the Rabobank economists focus on the Dutch ornamental flower cultivation, a sector that is already feeling the consequences of the Brexit. Sector specialist Arne Bac, Rabobank: "Brexit affects everybody in the sector: exporters, growers who sell in the UK and growers who do not sell in the UK. Dutch exporters will have to deal with extra phytosanitary and other checks at the border in the various Brexit scenarios. In case of a free trade agreement between the UK and the EU, the UK can acknowledge the phytosanitary checks of the country of origin, but there will be custom formalities. If the UK and the EU form a customs union no custom formalities are required. In case of a hard Brexit delays at the border are expected, which will be disastrous for the quality of flowers and market confidence."
Local production in the UK will be relatively cheaper than importing because of the trade barriers. Bac: "The British pound can add to that, depending on long term price trends. Establishment in the UK could be an option for some producers. On the other side we expect a sharp decline in the availability of seasonal workers from the EU in case of a hard Brexit. But also in case of a soft Brexit or a customs union the free traffic of employees will lead to less opportunities for employees from the EU. Furthermore the composition of the assortment bought will change because of the more expensive import. This market development has already been brought about because of the lower pound."
View the Brexit Monitor at: Rabobank.nl/brexit
For more information:
Alexandra Dumitru, economist Rabobank: +31 30 21 60 441 or alexandra.dumitru@rabobank.nl
Arne Bac, sector specialist ornamental flowers Rabobank: +31 6 54 90 75 35 or arne.bac@rabobank.nl
Lambert van Horen, analist ornamental flowers Rabobank: +31 30 71 22 650 or lambert.van.horen@rabobank.com
Rabobank
View the Brexit Monitor at: Rabobank.nl/brexit
For more information:
Alexandra Dumitru, economist Rabobank: +31 30 21 60 441 or alexandra.dumitru@rabobank.nl
Arne Bac, sector specialist ornamental flowers Rabobank: +31 6 54 90 75 35 or arne.bac@rabobank.nl
Lambert van Horen, analist ornamental flowers Rabobank: +31 30 71 22 650 or lambert.van.horen@rabobank.com
Rabobank