UK Packaging Industry Can The Weather The Storm Of Uncertainty

There is a lot of uncertainty in Britain due to the Brexit vote but Nicholas Mockett, the head of packaging M& A of Moorgate Capital is confident that the packaging industry will be one of the best performers and can easily weather the storm. Brexit was actually a close call and was not expected by the people so that the financial market reacted and the government became indecisive. No one knows what will happen next because there has been no previous experience of a country leaving the European Union.

The packaging industry is very likely to be one of the best performers in spite of the uncertainty because the biggest end market of packaging is food supply chain. Since a significant amount of food is produced locally, it follows that packaging will also be sourced locally. This is also true for other markets like pharmaceutical packaging. Large multinational companies tend to have a different manufacturing footprint, economies and currency exposures so that they have a natural hedge. However, in the long run, depending on the trade agreements that will be eventually reached, it may be more difficult to export packaged goods which will impact on packaging suppliers.

The reduction in the value of Sterling may boost the demand for products coming from the UK as they become relatively cheaper in the global market. This will be good for UK industries that export products to major markets in the US, France, China and India. Even if the price of raw materials like pulp and polymer increase because they are priced in dollars, there are mechanisms in place for price agreements.

Even if the United Kingdom goes into recession, the packaging industry will survive as have been proven in the last recession. The packaging industry is defensive or even counter cyclical. There are massive opportunities for the industry even with the economic upset due to Brexit vote.

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