Whisky makers warn of damage in store in no deal scenario

The makers of Scotch whisky have issued a warning to MPs that a no deal Brexit scenario would strike a damaging blow to the £4.5bn industry, which is the UK's biggest food and drink export.

The Scotch industry, which supports 40,000 jobs across the UK, is particularly sensitive to the fall out from a no deal Brexit because 90 per cent of its produce is exported. 

The industry currently accounts for 20 per cent of all UK food and drink exports.

With support for Theresa May's Brexit deal failing to pick up steam, the Scotch Whisky Association urged the government to carefully consider the gravity of crashing out of the EU without a deal in March.

“It is imperative that the government and parliamentarians work together constructively and quickly to find a way forward which provides clarity for businesses and employees and avoids a no-deal Brexit,” a spokesman for the Scotch Whisky Association said yesterday.

The association said that, on balance, May's Brexit deal is in line with its priorities and has pushed for MPs to vote in favour of the deal in order to avert the costs associated with a no deal.

In the case of a no-deal Brexit, non-EU importers of Scotch Whiskey would immediately lose access to the lower tariffs that have been set up through EU free trade agreements.

This would mean a sudden hike in import duties for certain important Scotch export markets such as South Korea, the Dominican Republic, Morocco, Lebanon and Panama.

The Scotch Whisky Association predicts that this would cost the industry £53m even before considering any implications for market share. 

Producers would also be forced change their packaging to create separate labels for bottles destined for the UK and those going to the EU. One business in the sector estimated that this would cost around £1.6m a year.

“A no-deal Brexit would damage our industry by forcing cost and complexity into the production and export of Scotch Whisky,” the spokesman said.