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Britain’s exit from the European Union: A look at the issues for landowners and farmers

Britain’s exit from the European Union: A look at the issues for landowners and farmers

Thursday 3rd March 2016

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Farming Matters - Issue 16 

We now know that there is going to be a referendum on 23 June this year to decide if the UK should leave the European Union (EU). Up until this date the news will be dominated by the arguments put forward by the leave and remain campaigns.

For landowners and farmers there are four main areas that are relevant to landowners and the rural economy. The first area which springs to mind is what is going to happen to the Basic Payment and the other payments made to undertake environmental work. In 2014 UK farmers received 54% of their income from direct support. There are widely different views on whether there should be direct support or if it requires fundamental reform. Few countries in the developed world do not have a funded support scheme of some description and the indications are that if the UK did exit the EU, then a replacement support scheme would be put in place. However, the concern would be that the level of support would be reduced. 

The next area to consider is the effect on trade. The EU is the major market place for the products of the rural economy with around 60% of all agri-food exports being exported within the EU and around 70% of the agri-food imports coming from the EU. Currently there is a free movement of goods between countries within the EU. It is likely that if the UK does leave the EU then some kind if arrangement will be made with the EU for the continuation of free trade. Examples of this are the arrangements with Norway and Switzerland. What is clear however is that the regulatory requirements (which is the third area of relevance) would still apply. It is often alleged that the UK enforces EU standards more rigidly than other EU countries and the common view is that these EU standards are often over the top. However, any goods supplied to the EU would still have to comply with the EU’s regulatory requirements and standards. Furthermore it is likely that most EU regulations would be transposed into UK law and therefore any change would be minimal. 

The final area of relevance is the labour market. In the first quarter of 2015 there were 1.9 million citizens from other EU countries employed in the UK labour market. The majority of the leave campaign view the ending of the free movement of people within the EU as a main reason for exiting the EU. Again a common held view is that workers from other countries in the EU are working in this country to the detriment of UK workers. However is it often the case that many of the jobs that the workers from the EU undertake are the types of jobs that employers are unable to recruit UK workers to carry out. An example of this is seasonal work such as fruit picking. The ending of free movement could therefore affect the availability of workers which in turn may force employers to increase salaries to obtain workers from the UK with the potential knock on effect on prices and profitability. Even the most strident critics of free movement therefore tend to concede that some form of seasonal worker exemption may be necessary for the agricultural sector.

Clearly there are going to be many developments before the referendum and landowners and farmers will be affected differently depending on the circumstances that applies to their particular situation. We will be keeping an eye on the developing debate and will report to you further in the next issue of Farming Matters.

If you would like to discuss any of the points raised in this article please do not hesitate to contact:

Charles Hansford
Partner, Real Estate 
Tel: 01772 229 829