‘Brexit’ would restrict labour flow and result in price inflation across the supply chain, Greencore chief executive Patrick Coveney claimed.
Speaking at last month’s Food Manufacture Business Leaders’ Forum, held at the London offices of host sponsor DWF and also sponsored by ALcontrol Laboratories and insurance firm RSA, Coveney said an exit could lead to the pound being devalued – raising the cost of raw material imports – and interest rate rises.
“Because we manufacture within, and sell to, the UK market, you would have thought the risk to our business was relatively benign. However, the more we’ve looked at Brexit, the clearer it is that it would be very bad,” said Coveney.
Raise costs
“We buy between £650M and £700M of raw material and packaging every year – half of which is from EU markets – and an exit would undoubtedly raise costs, both in the near- and long-term, because of the likely new set of trade relationships that would be established.”
Greencore employs in the region of 12,000 people in the UK, and Coveney said any restriction of the EU labour market would impose further costs on the business.
“About 35% of our employees are EU nationals from outside the UK, and while the impact on our business relative to farming, distribution and retail is pretty modest, we still believe it will result in a 1% inflationary business cost.
“I also think there will be a very pronounced devaluation of sterling, which although good for exporters, will mean the Bank of England would have to put up interest rates, impacting on potential investment opportunities for UK businesses.”
A straw poll among Forum delegates resulted in near-unanimous support for staying in the EU.
Businesses should have a plan
Joanne Denney-Finch, chief executive at industry think-tank IGD, said if a Brexit occurred, “every business operating here needs to make sure it has a plan.”
“A great deal of UK law is entrenched in EU law, which will take a long while to unpick,” she said. “We don’t just face a year of uncertainty – it will last for longer than that.”
Coveney said an EU exit would also hit the UK’s trade with the US, as part of the Transatlantic Trade and Investment Partnership talks. Trade in agriculture between the EU and the US is believed to be worth about £30bn a year.
“The US has no interest in a bi-lateral deal on food with the UK,” said Coveney. “It’ll go right to the back of the queue, after Europe has done its deal, followed by China.”
Watch our exclusive video interview with the Greencore ceo here.