Automation needed to avert a labour crisis

The food industry needs more automation to compensate for the loss of EU workers

UK food and drink manufacturers should turn to automation as there will be a labour supply crisis regardless of the outcome of Brexit negotiations, a leading economist warns.

Remaining in the Single Market or moving to World Trade Organisation rules would make little difference to the shortage of overseas labour, so firms needed to be “slicker” and employ fewer people, Roger Martin-Fagg claimed.

Martin-Fagg was addressing delegates at the annual British Frozen Food Federation Business Conference, which took place in Birmingham last month.

“I’m absolutely sure that the Brexit vote is going to have an impact on immigration,” he said. “Polish people must be looking at the 20% reduction in the value of sterling against the zloty, and realising they are better off staying at home or working in Germany. We are already seeing this happen.”

‘Short of quality EU workers’

According to Martin-Fagg, whatever deal the UK does with the EU, “we are going to be short of quality EU workers over the next few years”.

“You’ve got to think really long and hard how you can automate your business, because the one thing you are going to come up against, regardless of the negotiations, is insufficient labour of the quality and at the price you’re willing to pay,” he added. “That is your big constraint, as far as I’m concerned.”

Martin-Fagg also predicted that the UK economy would continue to grow in 2017, as wages increased and consumer confidence remained high.

‘Sharks in Brussels’

“There are a lot of sharks in Brussels lurking in frozen waters just waiting for Article 50 to be triggered.”

  • Russell Patten, Grayling Global Brussels

However, he forecast trouble further ahead as long-term investment inflows from Europe dried up as Brexit loomed.

“We all suffer from something called ‘the monetary illusion’, whereby if wages go up – irrespective of rising prices and inflation – we spend more,” he said.

“But if long-term investment stops coming in, we will have to finance our balance of payments deficit – which is the highest it’s ever been – through short-term funding.

‘Housing market collapse and ultimately a recession’

“This will mean higher interest rates and cheaper currency, which in turn means higher inflation, a housing market collapse, and ultimately a recession.”

A former president of the British Chamber of Commerce in Belgium used the event to warn delegates that the current mood in Brussels over Brexit was split between giving the UK “a big kicking” and a more pragmatic understanding of the implications on trade.

Russell Patten, chief executive at PR firm Grayling Global Brussels, said the Brexit “divorce” was going to be painful, and UK manufacturers needed to be as vocal as possible.

“As a business, you’ve got to reach out to Brussels, you’ve got to reach out to officials in the Member States and remind them about what’s important for business, and also for European citizens,” he said.

“There are a lot of sharks in Brussels lurking in frozen waters just waiting for Article 50 to be triggered.”

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