What would convince consumers that a no-deal Brexit comes at a cost? Shortages at the shops? Probably not, and not likely to happen - assuming a relaxation of import controls and a continued trend to veganism.
Higher prices on the high street? Probably not, either - assuming zero import tariffs, and a currency already pricing no-deal in. Shortages and shorter prices at the high-street bookies? Quite possibly, yes, and this could actually happen - assuming equine export controls and an increase in favouritism.
According to the boss of Flutter, which owns bookmakers Paddy Power and Betfair, fewer horses at race meetings is a real possibility under a no-deal exit from the EU, because transporting them between Ireland, France and UK will become more difficult. And, according to an analyst at broker Shore Capital, fewer horses would mean smaller fields and therefore shorter-priced favourites.
For Flutter, which attracts more racing punters than its rivals, that could theoretically trim margins, but would seem to have little impact on its business as a whole: last week, it maintained its full-year earnings guidance.
For the horseracing industry, it may not have an immediate financial impact, either: this week, its governing body expressed confidence in avoiding Brexit disruption.
So, is this Project Fear off to the races? It depends on whether you believe Flutter's Peter Jackson, who prices a no-deal Brexit at 5/4 as the parliamentary clock ticks down, or the type of optimist who still prices it at "a million to one".
Imports of horses to the UK from Ireland and France will not be affected by a no-deal Brexit, as the UK is replicating current systems. However, the problem is transporting horses back - and there are 26,000 of these border crossings a year for racing and breeding purposes.
Animal checks
They are currently permitted without checks under a “Tripartite Agreement” between the countries. That becomes invalid in a no-deal Brexit, though, as it operates as a derogation to EU rules. According to the Department for Environment, Food & Rural Affairs: “You will only be able to continue exporting equines from the UK to the EU in a no-deal Brexit if the EU lists the UK as a third country.”
Earlier this year, the EU voted to do this - listing the UK as third country for animal health purposes in the highest category "A". But it must vote again in the event of no-deal, and even a category "A" designation would impose new border checks - which Ireland can facilitate in only four locations and Northern Ireland in none.
Unless a special designation is granted, then, many owners are likely to avoid the extra time, cost and animal welfare risks involved. So the Irish and French may stay away, and interbreeding decline. Certain voters might like that arrangement for people, but less so for their Aintree and Ascot runners.
Copyright The Financial Times Limited 2019
