Ian Wright

FDF director general Ian Wright

FDF director general Ian Wright has told MPs failure to reach a Brexit trade agreement with the EU would be “catastrophic” for the food and drink industry.

Giving evidence to the Business, Energy and Industrial Strategy Committee today, Wright also warned that the outcome of negotiations would have to be far superior to Canada’s free trade deal with Europe, if it were not to lead to reduced availability, higher prices and supply chain chaos.

“The mantra that no deal is better than a bad deal is vacuous tosh,” Wright told the committee, who said consumers would not settle for a piecemeal deal.

“We absolutely have to do a comprehensive, bold and ambitious deal with EU - that is a cornerstone of the future prosperity of the UK food and drink industry,” he said.

“If [the EU deal] is not considerably better than Canada, consumers and shoppers will be disappointed. It will be noticeably worse than what we have now.

“Worse choice, availability and speed.”

Wright also warned that with food inflation already looming large in the run-up to the vital Christmas trading period, a ‘no deal’ with Europe on trade would have a major impact on future food prices.

“In the event of a no deal you will see food prices rise,” he said.

Wright predicted there could be price rises of 7% to 10% if there was no deal, though he acknowledged the situation was hard to forecast because of the mitigating impact of the price war between the supermarkets.

Figures from Kantar Worldpanel released on Tuesday indicated that food inflation hit 3.6% in the three months to 3 December - the highest rate since 2013.

Andrew Kuyk, director general of the Provision Trade Federation, told the committee he believed Wright’s predictions on prices could turn out to be be conservative. Kuyk predicted that a ‘no deal’ could see price hikes of up to 15%.

Asked what the impact would be on the industry, he said: “Everything is moving in the wrong direction - currency, tariffs, customs costs will all add to cost of food.

“Some businesses will cease to be viable. They will undoubtedly be replaced by others but there will be some frictional changes in the short term.”

Kuyk warned of short-term physical shortages of supply that would lead to higher prices in shops.

“I think we could see some fairly dramatic things in the short term that would level off as businesses reconfigure to deal with the new situation.”

Association of Licensed Multiple Retailers chief executive Kate Nicholls added: “The big issue is not whether there is no deal, a bad deal or a Canada deal, it’s the uncertainty of the situation businesses are facing. Protracted uncertainty, especially around access to labour, is the key problem we are facing,”