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The Effects of Brexit on Trade (And What This Means for the Italian Wine Lover in Britain)

It finally happened.

Years after the referendum in which the British public decided that it no longer wanted to be part of the EU, Brexit has finally been carried out. The process was delayed numerous times, both as a result of ongoing negotiations and due to the impact that the pandemic has had on the world.

But it’s done.

The ink has dried, Britain is out, and we’re entering a new trade environment for all of Europe.

Of course, Britain rescinding its membership means that the country is now faced with the same restrictions that other non-member states must deal with. There are also specific restrictions and allowances detailed in the Brexit agreement that we’re not going to go into detail here.

It’s not the specifics that concern us.

It’s the impact this situation has on the world of Italian wine, specifically in regards to British people and their ability to buy Italy’s wines, that we are concerned with.

Now that we have reached March, we finally have some statistics on the effect that Brexit has had on trade between Britain and the EU.

The early figures do not make for pretty reading.

Trade is Down on Both Sides

With a host of new restrictions in place, it isn’t surprising that trade between Britain and the EU decreased. But what may be surprising is the size of the decrease and the fact that it has occurred on both sides.

First, let’s examine British exports into Europe.

The British government has made some spurious claims about trade “returning to normal” in the months following Brexit. However, the numbers simply don’t back this statement up. According to the UK’s Office of National Statistics (ONS), exports from the UK into Europe dropped by an astonishing 40.7% in January 2021.

Now, there is an argument to be made that this drop is partly due to manufacturers getting to grips with the new rules they must follow. However, it’s pretty clear that even when the rules are fully understood, Britain simply won’t be sending as many products to the EU.

This 40.7% drop is the largest the ONS has recorded since 1997, which is the year when records began.

That means it’s the largest decline in trade between Britain and the EU since the beginning of the recorded history of trade between the two entities.

That’s worrying news.

But it’s made worse by the fact that exports from the EU into the UK have also fallen dramatically. While not as large as the decline in the reverse situation, exports from the EU have still dropped by 28.8% in January 2021.

Again, that is the largest decline the ONS has ever recorded.

Is This a Symptom of a Larger Issue

Some may believe that this decline in trade has other causes beyond the Brexit agreement. For example, you could argue the pandemic is playing a part as it has disrupted trade all over the world.

But again, the figures don’t appear to back this argument up.

The ONS points out that it’s only trading between the EU and Britain that has declined. Britain’s trade with nations outside of the EU has remained stable, so it’s clear that Brexit is the driving force behind these massive changes.

Again, the UK government is insistent that trade is returning to normal. But the data doesn’t back that up, and nor does the evidence from Britain’s manufacturing sector. For example, data shows us that about 50% of the lorries leaving Britain to return to the EU are currently empty.

Prior to Brexit, that figure stood at 30%.

In other words, thousands more lorries are coming back into the EU without stock from British suppliers. Again, we can see here that exports from Britain are on the decline. And the data from the ONS suggests that the same situation exists for lorries coming back into Britain.

All told, we have a very worrying trade situation.

What Does This All Mean for Italian Wine?

There are two ways to approach this question.

The first is to look at the impact on Italian wine producers and retailers. 

Going forward, it’s likely that many of the smaller producers will struggle to export their wines into Britain. There’s simply too much paperwork to deal with, as well as added costs, which may lead to them deciding not to trade in Britain at all. Larger producers, particularly those that specialise in wines that are popular in Britain, will likely continue trading.

Of course, this will have a knock-on effect on British consumers.

It’s likely that consumers will have access to fewer varieties of Italian wines in supermarkets and specialist stores because smaller producers won’t provide their wines anymore. We may also see British consumers having to pay more for their Italian wines, especially when issues like VAT come into play on top of all of the other restrictions.

In short, it’s not a favourable situation for either side of the Italian wine industry. Producers, particularly smaller ones, may feel cut off from a country that previously provided them with a lot of revenue. And consumers may no longer have physical access to Italian wines that they were previously able to purchase in stores.

What’s the Solution?

That’s a huge question and it’s one that the Xtrawine team is certainly not equipped to answer on a general level.

However, we can supply a solution to the question of where Brits can find variety in Italian wine if it no longer exists in physical stores…

Look online!

At Xtrawine, we maintain a collection of over 2,000 wines from Italy and other major territories from around the world. We’re also able to deliver these wines anywhere in the UK, which means the Brexit restrictions don’t have to stop you from enjoying your favourite tipple.

We don’t know what the future holds for trade between Britain and the EU.

All we know is that we will do everything in our power to ensure that people from all over the world have access to the best Italian wines.

HIGHLIGHT

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