As Brexit draws closer, uncertainty concerning the UK’s future only grows. Politicians and investors alike have been voicing concerns on both sides, and extensive research is being carried out in an attempt to predict how exactly the UK will be affected.
In the whisky industry, opinions are equally divided, with many claiming that Scotch whisky producers and distributors will be hindered post-Brexit by increased laws and regulations.
Others claim that Brexit will bring with it many new opportunities for Scotch whisky’s reach over the globe.
Let’s begin with the negative view of Brexit’s effect on whisky with research carried out by investment bank Macquarie. According to the findings large Scotch whisky companies, such as Diageo, will experience a rapid increase in international trade tariffs.
Leaving the European Union would also see the UK removed from the 27-nation free trade agreements with other countries. In South Korea tariffs could rise from zero per cent to 30, and in India and Indonesia tariffs will reach 150 per cent.
“The Scotch industry relies on the UK’s membership of several key trading agreements, all of which are directly or indirectly linked to EU membership, for protection from tariff and non-tariff barriers to trade,” Macquarie said.
Despite the information above, there are many who believe the Scotch whisky industry will flourish post-Brexit. David Frost, chief executive of the Scotch Whisky Association, is one of those people.
“Brexit poses challenges and uncertainty but also brings opportunities if the UK can secure favourable bilateral trade deals with key export markets,” Mr Frost tells the Press and Journal.
“India, for example, is a growing market for Scotch but we are being held back by a 150 per cent import tariff. EU talks with India have proved challenging for a decade now and we hope the UK will now take a fresh approach to securing an ambitious trade agreement.”
The Scotch Whisky Association (SWA) has stated that its priority is to eliminate tariffs and trade barriers with many major and emerging markets including China, Brazil, Burma, Vietnam, Angola and Nigeria.
The SWA has also played down the prediction by Open Europe, which claims that leaving the EU’s free trade bloc would cost UK businesses £25 billion per year.
“We want the UK to have an open and liberal trading policy, to put transitional arrangements in place that minimise trade disruption after Brexit, and to negotiate better global arrangements than we currently have,” Mr Frost added. “An even more trade-focused British embassy network around the world will be needed to make this happen.”