Shoppers will face “frightening” price hikes in the event of a no-deal Brexit under the UK’s proposed tariff policy, food suppliers have warned.
It follows Boris Johnson’s claim on Monday that a no-deal exit would be a “good outcome” for the UK as it would provide “full control over our laws, our rules, and our fishing waters”.
Food tariffs will rise by an average of 20% if there is no EU trade deal, according to the BRC, though products such as olive oil could see increases of at least £1/litre.
“You cannot possibly hit people with that level of food inflation,” said Walter Zanre, MD at Filippo Berio UK.
The small margins in the food industry mean the full costs will be passed on to consumers, according to Zanre, with the olive oil producer facing tariffs costs of more than £13m each year on its UK sales.
“[The government] can’t just be oblivious and ignore the potential consequences for something like this. There will be more and more people on the breadline, at food banks. It beggars belief that you could have situation like this.”
Environment secretary George Eustice confirmed on Radio 4’s Today programme on Monday that tariffs will apply on both imports and exports with the EU in the event of no-deal.
Many think, however, that price rises will be politically unsustainable for the government, forcing it to drop the tariffs under no-deal, according to David Henig, director at the UK Trade Forum and a former UK trade negotiator. Tariffs would be in addition to other costs facing the industry as a result of friction set to come in on cross-Channel trade.
“In the event of no deal, food will be hit more than almost any other sector,” said Henig.
Tariffs are typically used to protect domestic production from cheaper foreign imports. Many proposed by the UK government, however, such as those on oranges and olive oil, will apply to foods with no UK production and therefore with seemingly no domestic industry to protect, said Kamil Shah, founder of the Olive Branch. It has led some suppliers to argue small businesses are being used as a “political bargaining chip” in the negotiations with Brussels.
“It makes me feel sick,” said Shah. “We’re told by the government that small businesses are the lifeline of the UK. To use them as bargaining chips is irresponsible and doesn’t give us much faith in believing the government on many levels.”
Shah wrote to Johnson, his local MP, in June, asking for clarification on the impact of no-deal and the tariff policy on businesses.
Johnson wrote in his response that “no deal is now an irrelevant concept” as the UK already had a deal with Brussels. “The question now is whether we can agree with the EU a deeper trading relationship.”
Downing Street officials now rate the chances of reaching a deal with Brussels at 30% to 40%, according to The Times last week.
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