The UK retail industry has again warned that food prices will rise from next year if new tariffs are imposed.
With the prospect of a post-Brexit trade deal between the UK and the EU looking increasingly precarious, the UK retail sector again warned on Friday that UK buyers would face high food prices higher from next year if new tariffs were imposed due to the government’s inability to reach a deal.
The UK’s Brexit transition period ends on December 31, and if the UK and the EU cannot come to an agreement, the UK would be forced to trade with its European neighbors on the terms of the ‘World Trade Organization (WTO), which would mean new tariffs.
British Prime Minister Boris Johnson said on Thursday there was a “strong possibility” that the UK could not reach a deal.
“Currently four-fifths of the UK’s food imports come from the EU and without a duty-free deal supermarkets and their customers face over three billion pounds ($ 4 billion) in tariffs. customs from 2021, ”said Andrew Opie, director of food and sustainability at the British Retail Consortium (BRC).
The BRC said the tariffs would force food retailers to raise prices to meet the additional costs.
He said many non-food retailers would also face large tariff bills for products of European origin, including clothing and ceramics.
Average rates over 20%
Under the UK’s new tariff schedule, which would apply from January 1 if a deal is not reached, 85 percent of food imported from the EU would be subject to tariffs of more than 5 percent.
The average tariff is said to be over 20 percent, with 48 percent on ground beef, 16 percent on cucumbers and 10 percent on lettuce.
The BRC also highlighted the challenges for seasonal produce in January, with a much higher proportion of fruit and vegetables imported from the EU at this time of year.
For example, the UK buys 85 percent of its tomatoes from the EU in January, up from 30 percent in June.
He said retailers had increased their stocks of cans, toilet rolls and other longer-lived products as part of their planning for a no-deal Brexit.
But he said lingering uncertainty over new controls and red tape from January 1 was likely to disrupt the supply of many products.
The UK left the EU in January and has since been in a period of transition, with trade, travel and business rules unchanged. This ends on December 31st.
If there is no deal to protect an estimated $ 1 trillion in annual trade against tariffs and quotas, businesses on both sides will suffer.
The EU and the UK are at odds over fishing rights, economic fair play and dispute settlement, despite months of discussions. The two sides set a deadline on Sunday to reach an agreement and avoid a chaotic breakup.
As a sign of potential disruption ahead, trucks heading to the English port of Dover lined up for miles on Thursday, with Brexit stockpiling and pre-Christmas traffic blamed.
Grocers fear a major disruption to their ‘just in time’ supply chains as the Brexit transition period ends shortly after the Christmas rush.
Delays of a few days in the entry into force of post-Brexit customs controls at ports could make fresh products unsaleable and lead to shortages of certain products.
Supermarket groups have built up inventory where they can, but warehouse space is scarce and most is needed to serve Christmas, the busiest time of year for grocery retailers. And although they will be looking to increase their stocks once Christmas is over, fresh produce such as salad and fruit simply cannot be kept for long periods of time.