Things not getting any easier for Theresa May

Prime Minister Theresa May
Prime Minister Theresa May

When he was prime minister in the 1960s, Harold Wilson said a week is a long time in politics. This was about how things could change. Theresa May must be feeling that the past week was interminable, having faced a tough message from her fellow EU heads of state, the cancellation of the vote on the Withdrawal Bill and a vote of no confidence by her own MPs. Then was back to Brussels for another round with her fellow EU leaders who, as politicians, understand the pressures she is facing.

As was said on social media this week, no matter how badly things are going for you, within reason, you would be worse off as UK prime minister. Her problem is that having got through a difficult week, the weeks after Christmas look just as difficult. Her position in the Conservative party is more secure, but her government could yet face a no confidence vote in parliament. The EU is ready to tweak the withdrawal deal, but it will not be changed substantially. This would apply regardless of who is prime minister, but Theresa May is more nervous than her critics about the economic fallout from of a no deal Brexit.

The result, so far as farmers are concerned, is continuing uncertainty. A no deal Brexit, which most people accept would be disastrous for agriculture, remains a possibility. It is probably marginally less likely than last week, but it is still difficult to see how the government can get its Withdrawal Bill through the Commons. That could only happen if people from all parties, led by Labour and the SNP in Scotland, accept that the offer from the EU is the best that will emerge. That will only happen if they believe they cannot secure a general election via a no confidence motion in the government. The chances of the economy and jobs being put ahead of political dogma however remain poor, and we seem destined to stay in a maze with no obvious exit.

In terms of possible outcomes I would rank them as withdrawal deal, the Norway plus option as a member of the European Economic Area, a Japan or Canada type free trade deal, no Brexit or a hard Brexit. This may be completely wrong, but it makes as much sense as any political forecast about what is possible. The EU has circled the wagons to protect Fortress Europe and that is not going to change. Those that believe Brussels can be moved have not witnessed how firmly the EU sticks to its principles. If doing so comes at an economic cost it has sufficiently deep pockets to ease the pain for member states affected.

Politics, fortunately, come and go but markets are real. The EU has always been enthusiastic about long term forecasting and over the years its predictions have proved reasonably accurate. The latest 2018/2030 market report adopts a gloomy view of prospects for beef. It says production has peaked and will decline right through to 2030. This is based on falling cow numbers, as a result of declining profitability. The report warns of the impact of environmental concerns and the impact of vegan and vegetarian diets.

On sheep the report says production will remain linked to environment-driven support measures. That is a lesson the industry needs to hope the UK will take on board after Brexit. Poultry is the one meat where the forecast is positive all the way, both in terms of production and demand. As poultry and pork vie to be the number one meat, growth in demand for poultry will offset EU demand for pork. The report says that will be compensated for by exports.

If the report is accurate prospects for dairy are encouraging. It suggests the growth in European milk production has tailed off and will now be a modest 0.8 per cent a year. It says consumer demand for cheese will continue to grow and that the EU is on course to supply over a third of the global demand for dairy products. By any standards that is a positive forecast. On grain the forecast is for an increase in production, led by demand, with the focus on wheat.

The overall message is that consumer demand will change, with issues such as the environment and animal welfare becoming more important. That will be the case as as much in the post-Brexit UK as it will be in the EU-27.