Never mind the ballots: Brexit and the hospitality industry

Claire Dodd

Claire Dodd

31 May 2016

With the UK set to vote on whether to stay or leave the EU, 23 June will be decision day. Claire Dodd finds out what the result might mean for the hospitality industry


Since David Cameron announced that Britain would be hitting the polls come 23 June to decide if the UK should break from the EU, campaign groups for either side have been pumping out scare stories; from open letters by large corporations to predictions of a dystopian future should we as a nation make the wrong choice.

For the hospitality industry – a market that depends heavily on imported goods, labour, and indeed in some parts of the UK, visitor numbers – the impact of the referendum could potentially be massive.

So what side are the hospitality and drinks industries on? And what would happen if we left? Extra costs? Difficulty exporting? Higher prices? Staff issues?

All together
Currently, the single market allows all 28 member countries to operate as one territory, without internal borders or regulations hindering the free movement of goods, people and services. No surprise, then, that the world’s biggest drinks company, Diageo, ‘strongly believes’ the UK should remain within that union.

‘For Diageo and specifically for Scotch whisky there is huge benefit for being part of the EU,’ says the company’s CEO Ivan Menezes. ‘The single market gives us a level playing field and more importantly it opens access for trade.’

The current ‘stay or go’ uncertainty is already causing issues, however. The British Hospitality Association (BHA) says it has seen evidence that investors have already started to delay investment decisions in the UK, something which could ultimately mean job losses.

The trade body doesn’t, however, know how its members are split on the issue. ‘We have members in both camps,’ says Ufi Ibrahim, BHA chief executive. ‘If the vote is to exit the EU then our role will be to manage any potential consequences – although no one knows what these consequences might be yet. But we do know that even if we do decide to exit, the UK could access existing EU funding for another seven years.’

It seems inevitable that an exit would mean significant job losses and a great deal of upheaval for a substantial number of people

Brian Trollip

Kate Nicholls, chief executive of the Association of Licensed Multiple Retailers (ALMR) says that currently, around two thirds of members are in favour of staying, but agrees that both uncertainty and a lack of good information are major issues.

‘Uncertainty or instability risk undermining investment and threaten to put a brake on growth,’ she says. ‘According to our recent survey, 55% of ALMR members feel only a little informed at this point.

‘[If we leave], we will have a two-year period in which to negotiate the details. The important thing for licensees to remember is that they will not be losing staff overnight, if at all.’

Ibrahim adds: ‘Even once a decision is made the uncertainty is likely to continue. If the decision is to stay, there will likely be some changes. If [we] leave – we don’t know yet what the impact of that will be for us and the other members of the EU.’

Lack of facts
The consequences of the vote – rather alarmingly at this stage – still come down to guesswork, with the terms of staying or leaving yet to be finalised with the EU.

Tim Martin, chairman of pub company JD Wetherspoon, has been one of the most vocal advocates within the industry in favour of leaving the EU. In a piece published in Wetherspoon’s in-house magazine, he cites Norway and Switzerland as two non-EU countries that still enjoy positive trading relations and free movement of people with the EU.

The latter point is perhaps the biggest issue for hospitality businesses. Research from employment consultancy People 1st estimated in August 2014 that migrants make up some 26% of the UK hospitality workforce, rising to 69% in London. It is as yet unclear if EU foreign nationals would require visas to stay, or if they’d be permitted to stay at all. If we leave the EU, staffing could be a major problem.

‘It would be a tragic change to lose the cultural influx,’ says Elliot Ball of London’s The Cocktail Trading Co. ‘If Erik [Lorincz], Marian [Beke] or Rusty [Cerven] hadn’t come over, the drinks scene would be missing some of its finest creativity.’

Brian Trollip, operations director for Dishoom says: ‘We’ve not seen any evidence at all to suggest that we’d be better off outside of the EU, and Brexit is a real concern for us. Not only is there a real risk of price increases to wine and spirits shipped in to the UK from across the Channel, but a large proportion of our guests and employees are originally from EU countries outside of the UK.

‘It seems inevitable that an exit would mean significant job losses and a great deal of upheaval for a substantial number of people. There are certainly problems within the EU which need to be resolved – but our view is that we should stay in, be part of the solution, and not gamble with the lives of so many people by stepping out.’

 

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