KPMG: Brexit to affect Spanish food industry

Britain's decision to leave the European Union (EU) could have a negative effect of Spain's food and drink industry, warns a report commissioned by the consultancy group KPMG.

According to the Spanish El Pais newspaper on Wednesday, the study, entitled "Food and Beverages: Trends for 2016" warns that the effects of Brexit are already being felt, with the value of pound against euro falling by over 15 percent, making imports increasingly expensive for British companies.

KPMG, one of the big four auditors in the world, conclude the higher cost of imports will see British companies look more at "locally produced goods," something that will have an especially negative effect on the Spanish agricultural sector.

The Brexit, which would presumably take Britain out of the single market, means new tariff rules will have to be negotiated, while Spanish producers could also be forced to seek new licenses to export to Britain.

The study warns that British consumers have already begun to reduce spending levels as the result of "a rise in uncertainty, an expected rise in unemployment and a loss of purchasing power," meaning that demand is already starting to fall.

According to government figures, the export of Spanish food and drink to Britain was worth over 3.5 billion euros (around 3.89 billion U.S. dollars) in 2015, making it Spain's most important export sector after the car industry.

If Britain significantly reduced its number of food imports, Spanish producers will be forced to lower prices to attempt to maintain their share of the market, while they could also face increased competition in their own domestic market as producers from other countries seek new markets as they too find doors closing on them in Britain.

Although nobody knows the exact effect of the Brexit, KPMG has warned Spanish companies of the need to start calculating the "the direct impact" of the decision and to start making plans accordingly. Endit