Food prices to rise without tariff-free trade, BRC report warns

Shoppers will face higher prices on essentials, including food, if tariffs on EU imports take effect next year, a new report has warned.

Average tariff on imported food will be over 20 per cent if no deal is agreed, the report by the British Retail Consortium (BRC) noted.

Four-fifths of UK food imports come from the EU. As per the new tariff schedule published by the UK government in May, which will be applied from 1 January 2021 if a deal is not agreed, 85 per cent of foods imported from the EU will face tariffs of more than 5 per cent.

This would rise to 48 per cent on beef mince, 16 per cent on cucumbers, and 57 per cent on cheddar cheese, the report added.

The BRC report, ‘Why Tariffs are Bad News for UK Consumers’, said the industry cannot absorb all the increased costs which would lead to price increases.

“Without a tariff-free deal with the EU, the public will see higher prices in supermarkets from next year, squeezing millions of families already impacted by the current economic downturn. This is not the fair deal that consumers were promised,” commented Andrew Opie, director of food and sustainability at the BRC.

Britain is in a standstill transition period with the EU – remaining in its single market and customs union until year-end – to give the two sides time to forge a new relationship on everything from trade to security.

Talks have so far failed to bridge gaps over many issues including fair competition guarantees. Negotiators meet again in Brussels next week but the bloc’s executive European Commission said there will be changes from 2021 in trade in goods and services, energy and legal cooperation, travel and tourism regardless of whether there is a new deal, or not.

“The fact that the United Kingdom will no longer participate in Union policies as of the end of the transition period will create barriers to trade in goods and services and to cross-border mobility and exchanges that do not exist today,” the Commission said in a note.

“These inevitable disruptions will occur as of 1 January 2021 and risk compounding the pressure that businesses are already under due to the COVID-19 outbreak.”

Opie urged the UK government to negotiate a zero-tariff trade deal with its largest trading partner.

“With the clock ticking down to 31 December, the government must put consumers first and agree a deal that avoids tariffs and minimises the impact of non-tariff barriers. This would prevent harm to shoppers, retailers and the wider economy.”

With Inputs from Reuters