Updated Updated: September 4, 2019

Brexit – Odds on Food & Fuel Shortages and Rationing

With the October 31st deadline set by Boris Johnson looming in the near future, and the prospect of a negotiated deal or an extension to the Brexit-date increasingly unlikely, a No Deal Brexit has suddenly emerged as a realistic prospect among the bookies. Now slashed to 6/5 with Betfair, a No Deal Brexit is most certainly on the table.

Could a No Deal Brexit Lead to Food Shortages?

According to a recently leaked cross-government study named Operation Yellowhammer, the UK could face months of severe disruptions in case of a No Deal Brexit. According to Michael Gove, the paper outlines the very worst case scenario in case of a No Deal Brexit, and not necessarily the most realistic one. Nevertheless, the bookies have started speculating what would actually happen on November 1st, if Boris Johnson’s government goes through with its promise.

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The UK currently imports more than 40 percent of its food, which is significantly higher than a few decades ago. Consequentially, the uncertainty and chaos unleashed by a No Deal Brexit could severely impact the availability of different goods. Billions of litres of milk – for example – is currently imported from the Republic of Ireland, and Betfair currently prices Milk to be the first officially rationed good at 9/1. Bread, Olive Oil and Cheese are all at 13/1, whereas – in the more curious end – Champagne and Prosecco are set at 49/1.

Concerns over food shortages were recently echoed by The Food and Drink Federation, who have called upon the government to temporarily pause a number of competition laws, which would allow the companies to coordinate supplies in case of a No Deal scenario.

Why Fuel Could Be Rationed First

The bookies are nevertheless in agreement that fuel, not food, is the most likely to be rationed first. Both Betfair and Paddy Power consider fuel rationing the most realistic at 4/1. Like many other economies, the UK depends on international supply lines of petroleum in order to sustain economic activity. Rations are probably unlikely but fuel shortages have been highlighted as a probable scenario by many experts.

At the same tie, ironically, the Yellowhammer Dossier predicts that a No Deal scenario could lead the British government to cut petroleum tariffs to 0%. This would increase imports but hurt the domestic petroleum and refinery industry. As a consequence of this, thousands of jobs in the UK could be lost as refineries would be forced to shut down – or converted to import stations as predicted by Yellowhammer.

It is, however, still too early to panic, and many of these dangers are probably exaggerated. Indeed, Paddy Power currently prices an official announcement on food rationing in 2019 at 13/1. 

During the 2016 Referendum Campaign, supposedly pessimistic assumptions about what would happen to the UK in case of Brexit were often flagged as “Project Fear”, and although Yellowhammer is imbued with a high level of pessimism, direct rationing still looks quite unlikely.

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