Friends in cement, the UK has decided to leave the EU. We at Global Cement were ‘Remainers,’ hoping for future reform of the EU. A slim majority of the British people saw it the other way and decided that there was no hope of reform, and that they did not want further integration. Jean Claude Juncker (president of the European Commission) himself had said in the week before the referendum that there was no possibility of further reform, no possibility of further renegotiation of the UK’s relationship with the EU. Perhaps his comments clinched the final result in the referendum. With 33 million votes cast, 17,410,742 (51.9%) were for an EU exit, while 16,141,241 (48.1%) were for remaining. Only 634,750 people would have had to have changed their minds for the result to be a tie.
The votes have been cast and counted (with amazing speed and efficiency) and the result is finalised: Leave. So be it. The prime minister has effectively resigned, and we can expect the leader of the opposition to go too. A whole new suite of politicians will come in to take charge of the negotiations over the UK’s relations with the EU. The UK will make the best of the situation, and will muddle through, as it always does. Nothing much will change, in all likelihood, at least not in the next two years. The remaining EU27 will not be minded to make it easy for the UK to leave, and for the most part will not wish to give the UK favourable terms (‘pour encourager les autres’ - to discourage anyone else from trying the same thing). But, on the other hand, a number of other countries are likely to start looking into the possibilities of staging their own referenda - and in the result of a ‘leave’ vote in their own countries, they will also be looking for favourable terms. Perhaps in the next few years a block of northern Euro-skeptic countries such as the UK, the Netherlands, Sweden, Denmark and Finland (er... and Germany?) will form, to demand a two-tier EU with reformed treaty rights and reduced political integration, but with full market access.
In the meantime, the value of Sterling has fallen, meaning that it will be more affordable for companies outside the UK to buy goods and services made in the UK - possibly offering a boost to exporters and leading, finally, to a more even trade balance. Perhaps Brexit is actually good news for UK cement and clinker exporters, as well as for those selling RDF into the EU. We can expect tax affairs to remain unchanged in the immediate future - and I would hazard a guess that the VAT system currently in place will not change either - no-one wants the chaos that would ensue if it did.
For the cement industries on both sides of the English Channel (‘La Manche’ if you are on the French side), a few things are up for negotiation. The REACH regulations on chemicals compounds, including cement and clinker, were originally seen as yet more bureaucracy but finally they can also be seen as a useful harmonisation, allowing easier cross-border trade: they may well be retained. Will the UK continue to be part of the EU ETS carbon trading scheme? Well, the UK government has been active in setting a green agenda, becoming one of the few nations to seek to set a floor price for carbon, so it is possible that it will remain within the EU ETS as a voluntary participant. While the price of carbon permits are low this is not an onerous situation, but once the scaling-back of issuance of permits takes place in Phase III, the price of permits is expected to rise to Euro15/t CO2 and beyond - and then there may be more pressure for the UK to leave the scheme.
Other countries are worried by the UK leaving the EU, for a number of reasons. The Germans, who have enjoyed strong economic links with the UK over the years, fear an unfettered and left-wing France setting the European agenda. The Italians with their weak banking system worry that a Brexit economic shock to the EU might cause the system to fail, while countries that ‘enjoy’ an annual influx of British tourists may find that there is a diminution in flow due to the increased costs of holidaying in the EU. The ‘Leave’ vote also means that there is a greater prospect of any other country voting to leave: It surprised me and surprises me still that the Greeks did not vote to leave some time ago.
Global Cement Magazine will continue as ever, looking at the global cement industry - nothing will change. Global Cement’s popular specialised conferences, Global CemFuels (on alternative fuels), SynGyp (synthetic gypsum), CemProcess (process optimisation), Global Slag (slag and slag cements) will all continue as before and will become even more affordable to delegates, advertisers and exhibitors due to the fall in the pound. What implications does the vote have for the global cement industry itself? There will be uncertainty around the UK economy for at least the next two years, and by extension the performance of the EU economy. However, in the wider world, perhaps Brexit is not so important after all. The future is uncertain, but then it always was.