Industry reacts to Brexit bombshell
June 24, 2016
by Erica Shaffer
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The United Kingdom's departure from the European Union is expected to take two years.
KANSAS CITY, Mo. – The wait is over, but uncertainty remains.
|UK Prime Minister David Cameron
Britons voted to leave the European Union with 51.9 percent of the vote, while 48.1 percent of votes cast were in favor of remaining in the EU after more than 40 years in the bloc. UK Prime Minister David Cameron, who called for the Brexit referendum, resigned his post. Cameron had campaigned for Britain to remain in the EU. “I don’t think it would be right for me to be the captain that steers our country to its next destination,” Cameron said during a televised news conference at 10 Downing Street.
Guy Whitten, a professor of political science and director of the European Union Center at Texas A&M Univ., said there was nothing Cameron or EU officials could have done differently to head off the backlash.
“This has been bubbling up inside UK politics for some time and David Cameron felt that he had to offer the referendum to keep his party together and to see off the threat from the UKIP [UK Independence Party],” Whitten said. “The EU has been very accommodating towards UK reluctance towards the EU.”
The “divorce” won’t happen immediately. The process is expected to take two years to complete. In the meantime, United States companies will be watching closely as the process of extricating the UK from the EU moves forward.
“…while Cargill believed that there were distinct advantages for the UK and member countries to remain together as part of the member of the European Union, the priority now is to closely monitor the situation and ensure that our business interests are protected during the coming months, as the situation unfolds,” the company said in an email to MEAT+POULTRY.
The US Meat Export Federation (USMEF) said the organization also will be following developments in the EU very closely in the wake of the Brexit vote.
“This is an unprecedented development that will have implications that are impossible to predict today,” USMEF said in a statement. “However, to the extent that the UK’s decision to leave the EU contributes to economic turmoil in Europe, this will be of considerable concern to US meat companies that have made significant investments in the EU market.
“More generally, the UK has been a moderating voice within the EU on trade and regulatory issues, and we will be watching for signs that the UK’s departure from the bloc results in a hardening of the EU perspective in these areas, which are of significant interest to companies doing business in Europe.”
The day after the referendum, EU Commission President Jean-Claude Juncker convened a meeting in Brussels that included EU presidents of the European Parliament and European Council. The officials released a joint statement in response to the Brexit vote.
“We will stand strong and uphold the EU’s core values of promoting peace and the well-being of its peoples,” the officials said in their statement. The Union of 27 Member States will continue.
“Any delay would unnecessarily prolong uncertainty,” the statement continued. “We have rules to deal with this in an orderly way. Article 50 of the Treaty on European Union sets out the procedure to be followed if a Member State decides to leave the European Union. We stand ready to launch negotiations swiftly with the United Kingdom regarding the terms and conditions of its withdrawal from the European Union.”
Reacting to the vote, financial markets plunged. On the London Stock Exchange the FTSE 250 index on June 24 dropped 7.19 percent, though the index partly recovered from an intraday low down more than 12 percent, the British Pound Sterling tumbled 9 percent, to $1.3636, and the Euro slid 2.6 percent to 2.57. The price of oil at mid-day was down $2.21 per barrel, off 4.3 percent (Brent crude).
UK food stocks fell sharply, though generally not to the same degree as the FTSE 250. Shares of Associated British Foods fell 1.9 percent, Greencore Group declined 6.5 percent, Greggs PLC dropped 14.5 percent, Premier Foods fell 4.9 percent, Sainsbury PLC dropped 8 percent and Tesco fell 3.2 percent.