How will new EU-UK trade deal impact Britain’s food industry?

Financial experts have hailed this week’s announcement by Prime Minister Sir Kier Starmer of a trade deal with the EU, a victory.

The deal delivers a swathe of benefits to Britain – a major headline being cutting lengthy and expensive food and drink checks between the UK and mainland Europe, which have caused significant headaches, price hikes, and long lorry tailbacks on both sides of the English Channel.

It is hoped that the unveiled agreements will dissolve barriers to trade, promote healthy partnerships and, ultimately, help to drive down prices.

Starmer, speaking on Monday, 19th May, said the deal was a win-win, following recent landmark trade agreements with both India and the USA. 

It puts Britain back on the world stage, he said. We are doing deals “that will grow our economy, putting more money in the pockets of working people”. He talked about jobs being saved and created, and greater growth, saying the deal is a huge vote of confidence in our nation. “It shows that as global instability is rising, the decisions that we’ve taken to stabilise the economy and lead the way internationally have made Britain a place where people want to do business.”

Key takeaways from the UK-EU deal include:

- Imports and exports of food and drink between the UK and EU will be covered by a new SPS (sanitary and phytosanitary) agreement, making it easier to trade across the border.

- Some routine checks on animal and plant products will be removed, allowing goods to be moved more freely, which should lower prices and increase choice in retail.

- The EU ban on UK exports of sausages, mince and chilled meats (in place since 2021) will end.

- A new deal on fishing rights means EU boats will continue to have access to UK waters until 2038.

The industry reacts

Karen Betts, chief executive of The Food and Drink Federation (FDF), said trade with the EU is “incredibly important” for the UK’s manufacturers. “Europe is our single biggest customer, and most of the food and drink we import - from ingredients to finished products – comes from Europe too. However, trade in both directions has become complex and challenging.” Exports to Europe have fallen by a third since 2019, she added, saying she’s pleased that a closer trading relationship has been delivered. “A high-quality agreement will have clear benefits for consumers and businesses, however, the Government must continue to work closely with industry on the detail, and ensure the UK is able to influence EU decision-making where this impacts British businesses and competitiveness, particularly where the UK aligns with EU rules.”

Professor Joe Nellis, economic advisor to accountancy firm MHA, called the deal a victory, adding that the PM has been “walking a thin tightrope”, balancing the UK’s relationship with the EU with Trump’s White House as he navigates the delicate global economy.

“The EU remains, by far, the UK’s single biggest trading partner. A trade deal that removes barriers to trade will be a real boost to the UK economy,  supporting UK exports, boosting lacklustre business confidence, and lowering the cost of living by for UK citizens by providing cheaper food imports,” Joe said, continuing, “The deal is good for UK growth — which is desperately needed — and can be expected to bring a degree of stability for UK exporters and for businesses in general.”

Also welcoming the announcement is the Agricultural Industries Confederation (AIC), which commended the work of the Government to foster a better working relationship with the EU. It has been a priority of the AIC and its members to lobby for an EU-UK SPS agreement for several years, and the organisation has been in regular conversation with ministers and civil servant for some time, working on a solution to dissolve frustrating barriers at borders in both directions.

A spokesperson said, “The AIC notes that wider policy issues such as environmental targets and agricultural policy matters are not included within the scope of the agreement, and we welcome this. Whilst we need to reduce friction in traded goods in both directions, the UK and devolved nations should continue to be able to set their own agricultural and environmental policies.

“We note the impacts that could arise from ‘dynamic alignment’ in our SPS regime, including pesticides. It is therefore vital that the full detail is worked through with the Government to ensure we understand what his means for business and the wider food system.”

Tom Bradshaw, president of the NFU, had a positive take too, though echoed the AIC’s reservations, saying “detail is king” and adding that the NFU will be scrutinising the small print on the specifics of the deal as they become available.

He said the deal has the potential to deliver a more mutually beneficial trading environment for UK farmers and growers, expecting, for example, that UK businesses will once again be able to export seed potatoes to the continent.

The Precision Breeding Bill, which the NFU campaigned hard for, must be top of the Government’s agenda too. This exciting policy area, which is also being considered by the EU, will help farmers improve resilience to climate change, enhance productivity and deliver nutritious food. The NFU is urging the government to protect the UK’s ability to make crucial regulatory decisions in this area, alongside others, and foster continued innovation and research.

Tom continued, “We have always sought a strong trading relationship with the EU which reduces friction at a time of global instability. But since 2020, farming and growing businesses have been faced with significant costs, burdensome paperwork and additional checks in order to trade with partners on the continent.

“The Government has clearly listened to these concerns. With the scope to remove Export Health Certificates and cumbersome controls at the border, this deal will deliver many benefits for agri-food exports to the EU.

“However, there remain important questions about what is within the scope of this agreement and, where current rules and regulations do differ, if there will be any exclusions. As negotiations in this area continue, it’s vital that our Government safeguards the progress we have made in policy areas such as precision breeding to enable the farming sector to continue to move forward in sustainable, resilient and innovative food production.”