Food shoppers and retailers face massive tariff bill, BRC warns
Supermarkets and their customers face £3.1 billion a year of tariffs on food and drink unless a free trade deal is reached between the UK and the European Union, according to the British Retail Consortium.
“The UK grocery sector is one of the most competitive in the world and operates on tight margins to offer customers the best value possible,” the BRC said in a press release issued this morning.
“However, if there is no deal before Christmas, the increase in tariffs will leave retailers with nowhere to go other than to raise the price of food to mitigate these new costs. Many non-food retailers will also face large tariff bills for EU-sourced products, meaning the total cost to the industry and its customers will be even higher.”
The EU is the UK’s largest trading partner and the source of four-fifths of UK food imports. In May, the UK published its new tariff schedule, which will apply from 1st January 2021 if a deal is not agreed.
Under the schedule, 85% of foods imported from the EU will face tariffs of more than 5%. The average tariff on food imported from the EU would be over 20%. This includes 48% on beef mince, 16% on cucumbers, 10% on lettuce, and 57% on cheddar cheese.
The BRC wants a zero-tariff zero-quota trade deal between the UK and EU. With coronavirus affecting the livelihoods of millions of people in the UK, many households can ill afford higher prices for their weekly food shop, it argues.
It adds that, given the highly competitive nature of retail, the industry cannot absorb all these increased costs, meaning the public would face higher prices from 1st January 2021. Furthermore, increases in physical checks, paperwork, and other non-tariff barriers will push up the cost for retailers even more.
Andrew Opie, Director of Food & Sustainability the British Retail Consortium, says: “There is no time to waste, the UK and EU must hammer out a final arrangement as soon as possible.”
UPDATE: Iceland boss Richard Walker has taken to Twitter and also warned about the prospect of major food inflation.
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