Brexit's Impact on Gilts, the Pound and the U.K. Economy
In the Devonshire countryside, sheep farmer Bryan Griffiths is trying to beat the Brexit countdown clock. His flock is on a high-calorie diet.
Griffiths wants them to be fat enough for sale before Oct. 31 in case Britain leaves the European Union without a deal, closing off the U.K.‘s main export market and causing prices to plunge. Griffiths, who tends about 900 sheep, spent extra money this year buying concentrated feed.
“I’m just trying to push forward the sales a bit, if I can, to avoid being caught with too many if disaster strikes,” he said. "It adds cost, so it's a calculated risk."
With Prime Minister Boris Johnson promising to pull the U.K. out of the EU with or without a trade deal, the timing is worrying some British farmers. Sheep are usually born in the spring and reared outside in the summer months, then sold for slaughter in the autumn, meaning a no-deal Brexit could potentially happen when the majority of lambs come up for sale.
Given that so many lambs will reach the market in late October, farmers fear the extra supply will further depress prices if there’s a chaotic break with the EU. Currently, almost all U.K. exports of sheep meat are sent to the continent. If Britain leaves without a deal, those sales face tariffs exceeding 40 per cent, which would stop almost all the trade, according to the U.K.’s Agriculture and Horticulture Development Board.
“It will bankrupt quite a few people,” said Antony Spencer, who farms in Warwickshire. He estimated that as much as 95 per cent of the annual hill-farming income comes from October to December. Several nearby farms have tried to quicken the fattening process and sell as many lambs as possible before the October deadline, Spencer said.
In North Yorkshire, Richard Findlay has already sold 200 sheep and is worried that the weak pound means it’s getting more expensive to buy imported goods, like fertilizer.
For other farmers, there’s not much that can be done before October. John Davies, president of the Welsh National Farmers Union and owner of 1,000 ewes in the Brecon countryside, said it’s impossible to slow lambing. Once the animals are in prime condition, they have to be sold, he said.
The government is working on plans to help the agriculture industry if there’s a no-deal Brexit and may provide direct assistance to sheep farmers, said a spokesman for the U.K.’s Department for Farming and Rural Affairs, declining to provide specific details.
"We’re looking for some level of support to get us through what we hope is a temporary political blip," said Griffiths, the farmer in Devonshire. "We would like some reassurance that the market won’t crash."