Brexit: High Court rules against government

We consider the implications for the drinks industry following news today that the High Court has ruled that the UK government cannot trigger Article 50 to spark Brexit on its own. 

This morning’s ruling comes after a challenge was launched by Gina Miller a London-based investment manager, who argued that Prime Minister Theresa May’s statement that the government could use royal prerogative to trigger Article 50 without the need for MPs in Parliament to vote on the issue, was unconstitutional.

Describing the ruling as one of “pure law” the Lord Chief Justice stated that the government did not have the constitutional power to withdraw the UK from the E –  however it is  uncertain whether a Parliamentary debate would amount to a ratification of the Brexit vote by MPs reluctant to go against the public vote, or a more detailed examination of the legislation involved.

In a statement read outside the High Court, challenger Gina Miller said the case was “about process not politics” and she urged the government not to challenge the decision. However the government has already vowed to appeal the decision and another hearing will be held next month.

At the very least, the ruling also seems to throws into doubt the timings of the Brexit process, which Prime Minister May had previously said would begin in March next year.

Drinks industry reaction

Following the ruling, Rosemary Gallagher, the Scotch Whisky Association (SWA’s) head of communications, said the SWA would continue to monitor the situation, noting that as any development with the Brexit process would be significant for the Scotch Whisky industry as a major exporter.  “Like other sectors, we want to be able to plan ahead with some level of certainty,” she said.

The Wine and Spirits Trade Association (WSTA), which is holding a Brexit seminar today, has already stated Brexit will be the “overwhelming” priority over the next few years and outlining the three key aims it would be working towards: an orderly exit that would minimized the disruption of historic flows in and out of the EU, exploiting fully the new opportunities for trade with third countries, and to continue to argue for maximum support from the government in terms of fairer and lower taxation, support for SMEs and growing exports, and less regulatory burden.

This “orderly exit” now seems to be cast into some doubt.

Speaking today, chief executive Miles Beale said this morning’s High Court ruling was always likely to be appealed. “If the Supreme Court rules that the government cannot trigger Article 50 without a vote in Parliament, it is likely at least to delay the UK’s exit from the EU. Preparing for Brexit remains a priority for the WSTA and we are working more closely with government to minimise disruption to the trade flow of wine and spirits into and out of the UK.”

At the WSTA’s conference in September, Beale urged the drinks industry to take a lead in forming the post-Brexit landscape, arguing that it needs to act now to prepare the ground rather than waiting until the formal process to be triggered.

The repercussions of the Brexit vote have already been felt across the wine industry, due to the fall in Sterling, which has been blamed for slashing margins as a result of the poor exchange rate, and raised the question of potential price rises across the industry.

Last month the WSTA warned that wine imported into the UK from countries in the EU was expected to increase as much as 29p a bottle due to the  devaluation of the pound, while wine imported from outside the EU is likely to rise by 22 pence a bottle.

It followed warning from former deputy prime minister Nick Clegg who said consumers face “crippling” rises in wine prices if the UK leaves the EU without a trade deal.

Wine suppliers including Naked Wines have started to put up some prices on wines, although Virgin Wine boss Jay Wright argued that the industry needs to “get a grip” instead of fuelling a negative perception of the industry to consumers.