Brexit: Higher prices almost certain as deadlock continues on trade talks   

With prospects for a post-Brexit trade deal with the EU looking precarious, Britain’s retail industry repeated a warning on Friday that shoppers faced higher food prices from next year if new tariffs were imposed in the absence of an agreement.

Britain’s Brexit transition period ends on 31 December. In the absence of a deal, Britain would trade with the European Union on World Trade Organisation terms, meaning new tariffs.

Prime Minister Boris Johnson said on Thursday there was a “strong possibility” Britain would not secure a deal.

“Currently, four-fifths of UK food imports come from the EU and without a tariff-free deal, supermarkets and their customers face over £3 billion in tariffs from 2021,” said Andrew Opie, director of food and sustainability at the British Retail Consortium (BRC).

The BRC said tariffs would force food retailers to raise prices to mitigate the additional costs.

Tesco Chairman John Allan has warned that food prices will go up if Britain leaves the EU’s orbit with no deal. Foreign Secretary Dominic Raab, asked about the remark, said there may be some changes in food prices.

The BRC said many non-food retailers would also face large tariff bills for EU-sourced products, including clothes and ceramics.

Under Britain’s new tariff schedule, which would apply from 1 January if a deal is not agreed, 85 per cent of foods imported from the EU would face tariffs of more than 5 per cent.

The average tariff would be more than 20 per cent, including 48 per cent on beef mince, 16 per cent on cucumbers and 10 per cent on lettuce.

The BRC also highlighted the challenges January posed for seasonal produce, with a much higher proportion of fruit and vegetables imported from the EU at that time of year.

For example, Britain sources 85 per cent of its tomatoes from the EU in January versus 30 per cent in June.

It said retailers had increased their stock of tins, toilet rolls and other longer life products as part of their planning for a no-deal Brexit.

But it said ongoing uncertainty surrounding new checks and red tape from 1 January meant disruption in the supply of many goods.

Delays of even a few days at ports could make fresh produce unsaleable and lead to shortages.

Grocers will seek to use alternative routes to the main Calais-Dover sea crossing, but options are limited and some ports are already congested.

Ocado said its supplies have so far not been impacted by current disruption at UK ports.

“We’re not being impacted at the moment,” Ocado CEO Tim Steiner told reporters on Thursday.

However, he again cautioned that fresh food can’t be stored.

“It needs free flowing ports for it to move from its country of origin to the UK,” he said. “The grocery industry will need and is confident that goods will move through ports,” he added.