Navigating the Break
Brexit and its consequences for the aerosol industry Patrick Heskins
What is Brexit?
On June 23, 2016, the UK went to the polls. The historic EU
referendum sought to gauge the public’s opinion on whether the UK
should remain a member of the European Union (EU) or leave. No
one could have predicted the results—a narrow majority, with 51.89%
of the electorate in favor of leaving and 48.11% believing the UK
should remain in the EU.
The government initiated the official
EU withdrawal process on March
29, 2017. The UK is now on track to
leave the EU on March 30, 2019. In a
letter triggering Article 50—the UK’s
intention to leave the EU—Prime
Minister Theresa May told the EU Council President Donald Tusk,
“As I have said before, that decision was no rejection of the values
we share as fellow Europeans. Nor was it an attempt to do harm to
the European Union or any of the remaining member states. On
the contrary, the United Kingdom wants the European Union to
succeed and prosper.
“Instead, the referendum was a vote to restore, as we see it, our
national self-determination. We are leaving the European Union,
but we are not leaving Europe—and we want to remain committed
partners and allies to our friends across the continent.”
Despite this reassurance, how the UK’s “divorce” from the European
Union will play out remains to be confirmed. As a result, question
marks over how this will affect business and industry remain,
particularly when it comes to importing and exporting.
Aerosols & Brexit
The UK aerosol industry is very important to the economy. One in
10 aerosols in the world are filled in here, making us the third largest
filler of spray cans globally after the U.S. and China. Latest BAMA
figures show that more than 1.5 billion aerosols are filled in the
UK every year. Not only are we a major manufacturer, we are also a
major consumer too, with more than 650 million aerosols used in
the UK annually.
The success of the aerosol industry means it is also a significant
importer and exporter. BAMA estimates that between 70% and 80%
of aerosols filled in the UK go to export, while about 50% of aerosols
consumed in the UK are imported. This equates to a cash value
(sales) of more than £550 million or €620 million ($754.4 million).
The figures speak for themselves but how the industry will operate
in a post-Brexit world remains to be seen. The first stage of the negotiations
over the UK’s withdrawal from the EU is now complete—
what do we know so far?
The UK has struck a deal on the financial settlement it will have
to make in order to leave the EU. EU citizens in the UK and UK
citizens in the rest of the EU have the right to stay. A framework for
negotiations on the Northern Ireland and Republic of Ireland land
border has also been drawn up. Despite this, the Prime Minister has
warned, “Nothing is agreed until everything is agreed.”
What next?
The next stage of the deal will focus on trade agreements—something
the aerosol industry will be watching sharply. At the moment
there are two “extremes” of exit from the EU on the table, dubbed
“hard” and “soft” Brexit.
Soft Brexit
A soft Brexit could see the UK follow the Norwegian model by
joining the European Economic Area. This means the UK would
have to maintain the four freedoms: freedom of workers, goods,
capital and services. This is something that so far has been rejected
by the UK government. This option would also require the UK
to continue to pay into the EU, again something rejected by UK
government.
Alternately, the UK could follow in the footsteps of Switzerland
by joining the European Free Trade Association. The UK has
already indicated its decision to leave the Customs Union and
Single Market, however the European Commission has warned the
UK it cannot “cherry pick” which aspects of EU membership it
would like to maintain. Brussels leaders have dismissed a Swissstyle
EU deal—a trading relationship that has taken many years
to develop—because the UK would be viewed as “having its cake
22 Spray April 2018
Chief Executive,
British Aerosol
Manufacturers
Association (BAMA)
This paper was originally presented at the Paris Aerosol & Dispensing Forum in February.