A warning that was intended for MPs was issued by the makers of scotch whisky. It said that a no deal Brexit scenario would have a damaging effect to the £4.5 billion industry, considered at the biggest food and drink export of the United Kingdom.
The Scotch industry supports 40,000 jobs across the United Kingdom. It is particularly sensitive to the fall out that will result from a no deal Brexit since 90 percent of its production is exported.
Currently, the industry accounts for approximately 20 percent of all the food and drink exports of the United Kingdom.
With support for the Brexit deal of Theresa May, the British Prime Minister, not being able to pick up steam, the Scotch Whisky Association requested that the government of the United Kingdom to carefully consider the gravity of dropping out of the European Union without a deal in March 2019.
Yesterday, a spokesperson for the Scotch Whisky Association stated: “It is imperative that the government and parliamentarians work together constructively and quickly to find a way forward which provides clarity for businesses and employees and avoids a no-deal Brexit.”
The association stated that, on balance, the Brexit deal of Theresa May is in line with its priorities and has urged MPs to vote in favour of the deal in order to avoid the costs that are associated with a no deal.
In case of a no-deal Brexit scenario, non-EU importers of Scotch Whiskey would lose access to the lower tariffs that have been set up through the free trade agreements of the EU immediately.
This would result in a sudden increase in import duties for some of the important Scotch export markets including the Dominican Republic, South Korea, Lebanon, Panama, and Morocco.
The Scotch Whisky Association foretells that this would cost the industry approximately £53 million even before considering any implications for market share.
The producers would also be forced to change their packaging to produce separate labels for bottles that are destined for the United Kingdom and those that are going to the European Union. A business in the sector estimated that this would cost approximately £1.6 million per year.
The spokesperson stated: “A no-deal Brexit would damage our industry by forcing cost and complexity into the production and export of Scotch Whisky.”