No-deal Brexit could cut sector value by £5.4bn

By Emily Hawkins contact

- Last updated on GMT

No happy ending: leaving the EU without a deal could mean big problems for the eating-out market, according to MCA Insight
No happy ending: leaving the EU without a deal could mean big problems for the eating-out market, according to MCA Insight

Related tags: brexit

A no-deal Brexit could reduce the value of the eating-out market by up to £5.4bn, according to MCA Insight.

The Bank of England’s scenarios were used to predict how the dining sector would fare in a ‘disruptive’ and ‘disorderly’ no-deal scenario, which looks to be the most likely outcome with an exit date of 31 October 2019. 

A disorderly no-deal Brexit was predicted to reduce the market by £5.4bn.

A disruptive scenario would mean that tariffs and other barriers to trade between the UK and EU were introduced suddenly. 

There would be some disruption at the border associated with re-certification of products. 

There would not be any new trade deals implemented within the five-year period, but the UK would replicate existing deals acquired by virtue of its EU membership.

MCA has predicted a disruptive no-deal Brexit would shave a minimum of £3.4bn off the forecasted value of the eating-out market in 2020.

In this scenario, the UK would lose existing trade arrangements that it currently has with non-EU countries through membership of the EU and revert to World Trade Organization (WTO) terms.

The UK’s border infrastructure would not be able to cope smoothly with customs requirements and there would be severe disruption at the border.

Bigger problems ahead

MCA Insight data scientist Daljit Johal said: “It is clear that Brexit has already had a detrimental impact on the UK eating-out market, however, our forecasts predict even bigger problems if the UK leave the European Union without a deal.” 

A no-deal Brexit has been estimated to reduce UK GDP by between 4.75% to 7.5%, Johal said.

Johal added: “A no-deal Brexit will have clear implications on consumer confidence and spend. 

“Rising inflation as a result of increased input prices will squeeze household incomes at a time when consumers are limiting discretionary spend. 

“Saving is currently at a record low, however, we expect this to change as precautionary consumers save due to economic uncertainty.”

The eating and drinking-out market in the UK has already shrunk by 1.9% so far, because of the EU referendum, the agency estimated.

Low consumer confidence has led to people eating out less, meaning there has been a reduction of £1.4bn in value for the market.

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