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Danish industry looks on nervously as UK Brexit drama unfolds

Fishing, dairy and meat production, manufacturing and pharma. A Brexit deal could yet safeguard key Danish exports to the UK.

Published: 15 November 2018 16:11 CET

Danish industry looks on nervously as UK Brexit drama unfolds

An ad for Danish dairy giant Arla in Copenhagen. Photo: Linda Kastrup/Ritzau Scanpix

The news that an agreement between the EU and the UK on the latter’s departure from the bloc has reassured markets, business leaders and politicians across Europe.

Danish Prime Minister Løkke Rasmussen said a deal was a “positive signal” but was cautious in his assessment. “What we, as Liberals, are concerned with is that there is balance and we don’t enter into a system in which the British are given unintended competitive advantages,” PM Rasmussen said in comments to national broadcaster DR on November 14th.

Reactions in Denmark to the recently-announced draft deal between the UK and the EU have generally been positive.

“The transitional agreement provides a certain amount of clarity for businesses that have long lived with uncertainty caused by Brexit,” Thomas Bustrup, director of the Confederation of Danish Industry, told Ritzau in a written comment.

The alternative, a no-deal scenario, has been haunting the DI and other Danish industry leaders. The UK is a major market for Danish meat, dairy, manufacturing, pharmaceuticals and more.

“Brexit will impact a range of sectors in the Danish economy; how much naturally depends on which agreement is made (if any). Agriculture and the fisheries industry seem particularly noticeable for Denmark,” Jesper Dahl Kelstrup, a researcher with Roskilde University, told The Local by email.

Many food companies, like dairy giant Arla Foods, are based in the region of Eastern Jutland. “Yet production is all over the country. It’s a national value chain. It is important to point this out,” Anders Ladefoged, head of European affairs at the Confederation of Danish Industry (DI), told The Local in an exclusive interview.

A brief glimpse at meat production in Denmark highlights how the whole country has a level of exposure to Brexit.

“If you take pork, meat etc, some companies are also in eastern Jutland,” adds Ladefoged. Danish Crown, which supplies more than a quarter of Britain’s bacon, is one of them. “Yet slaughter facilities are in different locations. Many parts of country are involved in meat production. This has been a traditional approach in the meat and dairy industry.”

Danish Crown’s UK subsidiary Tulip has been buying local manufacturers, a potential bid to avoid post-Brexit tariffs, duties and delays, and to localize production in one of the company’s most important markets. This could have a knock-on effect on jobs in Denmark, if a large quantity of production and manufacturing is moved to the UK.

“If companies choose to transfer production from Denmark to the UK because of Brexit that would affect jobs in Denmark,” Ladefoged told The Local.

Like for many EU states, Brexit is a double-edged sword for Denmark. Although mainly a blunt one-sided one threatening to disrupt various industries. Like fishing.

“Fishing is a very important sector. A lot of fish is landed in Jutland but caught in British waters,” clarified Ladefoged. Even British fishermen land their catch in Denmark because of the manufacturing and processing facilities in the country.

A 2018 study by the University of Aalborg estimates that up to 1,500 jobs could in the Danish fishing sector could be lost if Danish vessels are locked out of EU waters. In other words, if the reported Brexit agreement does not allow EU vessels access to British waters.

That study focuses on “four ports and the communities of Thyborøn, Hanstholm, Hirtshals and Skagen” in Jutland.

“Thirty-five vessels obtain more than 15% of their landing value from catches in the UK EEZ. The UK-EEZ catches, primarily herring, mackerel and species for non-human consumption, represent a landing value of DKK 982 million,” states the report.

The study assumes two scenarios. In the least bad one, the Danish vessels currently operating in UK waters would lose at least 50 per cent of their profits and catch based on the estimate that Danish vessels will not be able to replicate the volume and quota elsewhere “as some of the very good fishing grounds are within the UK EEZ.”

Fishing might be Denmark’s Brexit quagmire, yet pharma could be its forte. “The pharma sector to a large extent is concentrated in Copenhagen. There is a cluster of companies in the pharma sector, which is becoming stronger and stronger. That is why Denmark also really wanted the European Medicines Agency,” DI’s Ladefoged told The Local. The EMA, which relocated from the UK next year, was eventually was awarded to Amsterdam.

Yet Ladefoged says that if any Danish sector can lure business from the UK, it is probably the capital Copenhagen’s pharmaceutical cluster. “Some companies looking to continue to operate from inside the EU could opt to set up in the Danish capital. It might also be companies from third countries,” adds Ladefoged.

The Danish finance sector could also lure some firms in the Uk worried about passporting rights. “Most financial services firms looking to relocate will opt for places like Paris or Frankfurt but there could be a thin trickle that could be interesting for Denmark,” says Ladefoged.

Denmark is unlikely to lure car plants from the UK. But then it doesn’t really want to: labour and expertise is what is needed most.

“There is already a capacity problem in Denmark. Unemployment is very low – in fact, there is a lack of labour. We need experts and labour in all of our sectors. We need access to more labour. If we can increase the number of experts and employees in each sector we would be able to increase our export in general,” says Ladefoged.

Could ‘Brexit refugees’ fleeing the UK be the answer? “If eastern Europeans leaving the UK wanted to come to Denmark that would be great, although that does not seem very likely,” predicts Ladefoged.

While news of a draft agreement in the future relationship between the UK and the EU has reassured markets, business leaders and the corporate sector, that deal must be approved by the UK parliament, what analysts are still calling a huge hurdle. In other words, a no-deal scenario is still a possible outcome regardless of the fact that the negotiating parties have reached agreement.

“One of the most immediate problems are the exports in food sectors, which will be heavily affected in the case of a no-deal Brexit. They are, however, prepared for it,” Ladefoged told The Local.

“What’s important for us now is that individual companies prepare. Now is the time to see how they might be specifically affected,” he added.

'I feel exiled': How Brits in Europe are locked abroad with foreign partners

Europe is home to hundreds of thousands of British nationals, many of whom have foreign partners and children. But if they want to move to the UK to live and work it will soon become more difficult.

When it comes to getting a partner visa, the UK has some of the strictest rules in Europe. In addition to hefty fees and a healthcare surcharge, the Home Office requires British citizens and long-term residents who bring their foreign partner to the UK to have a minimum income showing they can support them without relying on the social security system.

The minimum income up until now was set at £18,600 (€21,700), or £22,400 (€26,100) if the couple had one child, plus another £2,400 (€2,800) for each other child.

But these income requirements will rise steeply from April 11th 2024.

How it works: What Brits in Europe should know about UK’s new minimum income rules

From this date the minimum a British national or long-term resident will need to earn if they want to return home will increase to £29,000 (€33,800) and up to £38,000 (€44,313) by spring 2025, although there will no longer be an additional amount for accompanying children.

Alternatively, families need to prove they have at least £62,500 (€72,884) in cash, which from 11 April will increase to £88,500 (€103,207).

‘Family life has been destroyed’

To put this in context the Migration Observatory at the University of Oxford suggests that around 50 percent of UK employees earn less than the £29,000 threshold and 70 percent less than £38,700. The Observatory also says that while the number of people affected by the policy is small compared to the overall UK immigration (family visas represent 5 percent of all entry visas), the impacts on concerned families can be “very significant”.

The Migration Observatory notes that other European countries apply income thresholds to sponsor foreign partners. Spain, for instance, requires sponsors to have an annual income equal to the social security salary. In Denmark, sponsors must not have claimed social benefits in the three years before the application. But in Spain and the US, the partner’s foreign income also counts towards the threshold.

So what does this mean for mixed British and international families living in Europe who might want or even need to return to the UK to live?

Campaigners have complained that many Britons with foreign partners have simply been “locked abroad” or families have been separated while they try to meet the minimum income or savings requirement.

Reunite Families UK, a non-profit organisation supporting people affected by the UK spouse visa rules, says this policy causes distress, especially for children.

Some 65 percent of respondents in research carried out by the group said that their child received a diagnosis of a mental health condition due to the separation of their parents.

“Since its introduction, this policy has destroyed the family life of countless people and children,” Matteo Besana, Advocacy and Campaigns Manager at Reunite Families UK said.

“Women have been forced to become single parents to their children and live away from their partner and the father of their children only because they didn’t meet the threshold.

“As shown by our research on the mental health impact of the policy, these are scars that, particularly for children, will be carried for the rest of their lives,” Besana said.

The people most likely to be affected are women, who tend to earn less or not work because they took on caring responsibilities. Also heavily impacted are people under 30 and over 50 years of age, people living outside London and the Southeast of England where wages are higher, and those belonging to specific ethnicities, according to the Migration Observatory.

The Local spoke to two British women, in Italy and Sweden, struggling to return to the UK with their families because of these rules.

More savings needed

Sarah Douglas, who has been living in Italy since 2007, was planning to return to Scotland with her Italian husband and three children.

“It was always our long-term goal to move back to the UK after we had our children and once we’d have saved enough to buy a home in the UK,” she said.

“In hindsight, we should have gone after the Brexit referendum, but in the beginning it wasn’t clear what the final deal would be and I naively assumed that situations like mine would be taken into account and we would have the right to return… Once it did become clear, we were in the middle of the pandemic and it wasn’t the time to move,” she said.

Having stayed home to take care of the children, Sarah will find it hard to land a job near her family in Scotland that meets the minimum income required to sponsor a foreign partner for a UK visa.

Her husband, a computer programmer, has been trying to get an employment visa, “but most of them state that you must already have permission to work in the UK,” Sarah says. And applying for British citizenship is not an option for a non-UK resident spouse.

‘People need to be aware’

Sarah and her husband are trying to save as much as they can, an alternative to the income requirement, but the amount they need is rising to almost £90,000, meaning it may be a long time before they have enough to move home.

While the aim of the UK’s policy is to ensure families moving to the UK are not a burden on the taxpayer, the reality is that people arriving on a family visa are not able to claim any benefits from the UK government.

“They should judge the overall financial viability of the family unit, rather than just the earning potential of the sponsoring partner,” Sarah says.

“We could live well with my husband’s salary and he could work remotely. We are stable and financially secure, but because I don’t earn any money, they say we are not able to support ourselves.”

Sarah says that most of the British public are unaware of the minimum income requirement.

“People think if you are married, your husband is allowed to come to the UK, but when I say no, it doesn’t work like that, they are really surprised. A lot of people are not aware of how this could affect them,” she said.

Looking for a job from abroad

Another British women who lives in Sweden with her South African husband and two children and plans to move to the UK told The Local how the minimum income requirement had put them in a “precarious and stressful situation”.

The woman, who preferred to remain anonymous said: “After having the two children, I was very fortunate to find a research position and do my PhD, which is a salaried position in Scandinavia, and now that I finished, we are looking to leave.

“But I need a job in the UK to sponsor my husband, and as a new graduate with limited work experience, it is not easy. It is even more difficult when you are not in the country and I missed out on opportunities because they wanted an immediate start. I really don’t want to move without my whole family,” she said.

She says the UK’s policy is “gendered and geographically discriminatory” because it makes life harder for women and also harder for anyone who is planning to move to a part of the country that isn’t in London, where salaries are higher.

“I feel exiled from my country and separated from my family there,” she said.

Her husband, she argues, has his own company and could continue working remotely from the UK, earning well above the requirement. He would also pay taxes and national insurance while having to pay the healthcare surcharge, a form of double taxation, she argues. But that would not entitle him to a visa.

“Our house is on the market now. We have booked removal companies for the 6th of June. The dog is booked for his transport. I just think this policy is so out of touch with the modern world,” she said.

Reunite Families UK has called on the government to recognise the right for British or settled citizens to bring their close family members to the UK and scrap the minimum income requirement. Alternatively, the group says the rules should take into consideration the earning potential of both partners and consider “the best interests of children”.

A petition on the UK parliament website asks the government to reconsider the minimum income policy. If it reaches 100,000 signatures, it will have to be debated in parliament.

This article has been produced by Europe Street news.

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