Ben Eastick Written by Ben Eastick

How the outcome of the election could affect the UK sugar industry

As Britain goes to the polls, what impact could the election have on the UK’s sugar industry?

What do businesses want from the UK general election?

Another year has passed and the time for making and confirming deals based on tonnage and sugar type has come and gone. We are still, therefore, uncertain of the export/import situation, largely due to a lack of Brexit negotiations clarity. The sugar industry needs to know what tariffs will be in place if/when we leave the EU (European Union), and what will be done in the meantime now that it has been speculated that it may take up to 24 months from the election date to finally leave the EU.

We have taken steps to ensure customer needs are met regardless of the outcome, including sourcing sugars from countries that will potentially be tariff free, meaning the sugar reserves are ready at a stable price for us and our customers. The best outcome, however, is clarity, certainty and consistency from whichever party or parties are chosen to lead the next government.

We have been assured that we will not need to stockpile sugar further. 

The potential outcomes

After looking through the various manifestos, I have drawn a rough conclusion for what will happen to the UK sugar industry in the case of each of the parties achieving a majority.

Conservative-led government

Current polls (at time of writing) suggest the most likely outcome of the election is a conservative majority. The Conservatives have recognised the trade tensions and promise to provide secure market going forward. We have been assured that we won’t need to further stockpile sugar, the negative effects of which are listed in a previous blog.

They “aim to have 80% of UK trade covered by free trade agreements within the next three years”, but until then it seems we would have to wait for up to 12 months to know exactly how tariffs would change for the sugar industry.

Labour-led government

Labour have said they will hold a second EU referendum, in order to give the public the chance to vote on a specific deal. Should this result in the decision to leave, the delay in leaving and uncertainty on trade deals and tariffs would last longer, the timeframe of which we have no idea.

Their manifesto suggests Britain would still be trading with the EU, but until a deal is confirmed we would be trading under World Trade Organisation (WTO) tariffs, making sugar more expensive to import from the EU. Without the EU, Britain currently has a smaller market and therefore less power in negotiations. Should we vote to remain, Britain will likely continue as before, although the exchange rate could be altered.

Liberal Democrat-led government

The Liberal Democrats are firmly on the side of remaining in the EU and ending Brexit, meaning no tariffs for sugar, from within the EU. The liberal democrats are pledging to secure stronger, better trade deals using the EU’s negotiating power, and maintaining the ease of trade deals with the EU for British farmers. However, the likelihood of the Liberal Democrats achieving a majority is so small, they will probably end up in a coalition government or having no say at all.

A hung parliament

Should there be a hung parliament, which some opinion polls are predicting, the resulting government is likely to be a Conservative or Labour-led coalition. This government could contain frictions and opposing ideas, meaning delays in leaving the EU. So, while tariffs are likely to remain unchanged, certainty will probably be no closer than it is now.

Parties tipped to form a coalition government are the Brexit Party, Scottish National Party (SNP) and the Liberal Democrats. The impact their presence will have will only be known once the terms of their coalition deal have been agreed.

Will the election mean an end to uncertainty for the UK sugar industry?

At this time, no party can say with certainty what will happen in the coming months. Instead, we will have to continue with our measures to combat the uncertainty that Brexit brings, for at least the next 6-12 months and wait for the clarity that we, and so many other businesses, want and need.

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