Dow sold off down to 25,673 and FTSE flat at 7196. Oil WTI at $56. Gold unchanged at $1303.
GBP slipping lower every day on increasingly likely chance of NoDeal Brexit. USD marginally weaker. Today it’s ECB watch day- watch out for them moving growth forecasts lower. OECD is now forecasting global growth at 3.3%.
Following the stories of what happens in the case of a cliff edge Brexit ie the UK exits the UK with No Deal to food supplies in the UK, it is worthwhile to focus on a very small number of statistics rather than becoming blinded by science. Firstly the UK imports 30% of its food from the EU and 10% from the Rest of the World. Put it another way, 60% is produced inside the UK. What about seasonal shifts or when food is out of season? I hear you say. The answer is that in March for example 90% of lettuces, 80% of tomatoes and 60% of soft fruit comes from Southern Europe. What might be the impact on food prices of a Deal/No Deal scenario? Prices will be driven by 3 main factors: Tariffs, GBP strength or Weakness and lastly Time(Additional border checks costs time which as we know is money) If the Prime Minister’s deal goes through(and admittedly it’s a big if) there will be no change for a 21 month interim period to tariffs. GBP will strengthen and no change to border checks, so in that case imported food will probably reduce in cost. If there is NoDeal and increased costs to those imported foods, the impact will of course be muted by canny shoppers tightening their belts and reducing consumption of more expensive imported foodstuffs plus, there will be a shift towards greater consumption of domestically produced fruit and vegetables when they are in season. So reduced avocado spend and greater interest in excellent English apples.
Discussion and Analysis by Humphrey Percy, Chairman and Founder
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