Confectionery manufacturers are among Czech businesses most likely to be hard hit by Brexit, Czech Radio reported this week. According to an analysis carried out by the country’s biggest bank, Česká spořitelna, about a quarter of confectionery goods produced in the country are destined for the British market.
Dagmar Spíšková, head of production at the Nestlé facility in Holešov, Moravia, told Czech Radio that they were bracing for the possibility of a no-deal Brexit. The facility annually produces around 10,000 tonnes of jellies, with more than 35 percent of the amount destined for the British market.
“We expect that the production for Britain will drop significantly. However, we don’t think we will be forced to discontinue production completely. Maybe we will have only three or two shifts instead of the current four,” she told Czech Radio.
In total, Nestlé Czech Republic produces five thousand tonnes of sweets targeted for export to Great Britain, which represents roughly nine percent of its overall production. Vratislav Janda, Director of Corporate Affairs, says it will be a significant drop.
“Nine percent cannot be easily replaced. You can replace one percent or half a percentage point, or even two percent, but nine is simply too much. Of course it won’t destroy our businesses, but it is a considerable blow to our economy,” Mr. Janda told Czech Radio.
A no-deal Brexit would also impose customs duties on imports, which would increase the prices of products.
“In case of confectioneries, we expect it will be around 30 percent. That means our products won’t be able to compete on the British market and British products won’t be able to compete on the European market,” Mr. Janda added.
Great Britain is currently the Czech Republic’s fifth largest export market. Products worth 210 billion crowns are exported to the country annually, which amounts to about five percent of overall exports.
According to an analysis by Česká spořitelna, exports to the United Kingdom could drop by 20 percent in the event of a no-deal Brexit, slowing down Czech economic growth by around one percentage point. The Czech Republic is exposed to British demand in particular for motor vehicles, with direct annual exports amounting to over 66 billion crowns.