The British Retail Consortium (BRC) has warned that supermarkets will face over £3 billion in tariffs if the UK leaves the EU without a trade deal and that these costs will be passed onto consumers. Both the UK and the EU stated on Friday that there is a “strong possibility” that there will be no post-Brexit trade deal between the two parties. Johnson however added that a no-deal scenario, similar to the relationship that Australia has with the EU, would still be “very good”.
If a no-deal Brexit goes ahead, supermarket chains will face new import taxes on goods from the EU, particularly fresh food. The BRC estimates that 85% of food imported from the EU will face tariffs of over 5%. The average tariff would be more than 20%, including 16% on cucumbers and 10% on lettuce.
BRC director of food and sustainability Andrew Opie said: “With just weeks to go, it is alarming that there has still been no deal agreed with the EU, putting customers in line for a £3bn tariff bombshell. Currently, four-fifths of UK food imports come from the EU and without a tariff-free deal, supermarkets and their customers face over £3bn in tariffs from 2021. Retailers are doing everything they can in time for 1 January but no amount of preparation for retailers can entirely prevent disruption to food and other essential goods that come from or through the EU.”
What are the outcomes of a no-deal Brexit? The contents of shelves in UK supermarkets could change. About 30% of the UK’s food currently comes from the EU, and fresh vegetables and fruit will become more expensive due to increased import taxes and transport delays. Moreover, there may be a fall in the value of the pound, which would compound the price rise. Supermarkets themselves have already warned that there could be empty shelves and higher prices and the Bank of England has said that shopping bills could increase by 10% in a worst case scenario.
The government has said that consumer behaviour could also lead to shortages as panic buying could mean food retailers run out of some products. Supermarkets say while they have been stockpiling some foods, they are unable to do that for fresh produce.
The UK could waive tariffs, but under WTO rules, it would have to offer the same reductions to other countries outside of the EU as well.
Defra has announced that rather than border checks, should there be a no-deal Brexit, food inspections will take place inland to ensure compliance with protocols. With the official Brexit date looming (29th March), Defra has confirmed that marketing standards processes at UK borders will not change in the short term if the UK leaves the EU without a deal. However, these arrangements are only temporary. The measure does not apply to green banana imports from the EU, with importers told to contact the PEACH helpdesk or the SASA Horticulture and Marketing Unit as appropriate. Horticultural inspectors will continue to assess fruit and vegetables travelling in transit from third countries through the EU to the UK to determine whether an inspection is required at the border and ensure that they comply with the UK’s marketing standards, according to the Defra notice. For produce imported via a non-EU third country, marketing standards checks will continue to be carried out at the border.
The UK will continue to accept certificates of conformity issued by countries in the Approved Inspection Scheme (AIS). Most imports from countries on the AIS scheme will not require routine marketing standards checks, but a small sample will be randomly selected for inspections.