UK Supermarket Chiefs warn of dearer food in a ‘no-deal’ Brexit.

Representatives of UK supermarket chains have formally given notice to HM Treasury that a no-deal Brexit may force up the price of the average weekly food basket by as much as 12%.

The default ‘World Trade Organisation’ (WTO) rules that govern movement of goods will apply.  In practical terms this means, for instance, price increases due to tariffs on: cheese of 44%; beef of 40%; and chicken of 22%.

The Times reports that the Treasury is taking the warnings seriously. 

This is further evidenced as Britain’s monetary chiefs are shifting the country’s foreign currency reserves into euros – amid wider claims that this is a vote of confidence in the stability of the single currency.  Brexit Partners had previously forecast this move [see Our Insight].

One supermarket chairman, who did not want to be named, warned that food imported from the EU would be hit with an average tariff of 22 percent.  This is even in a 'no-deal' scenario with Britain trading with the EU under a ‘most favoured nation’ WTO rule. 

“It’s complete nonsense that Brexit supporters say we could, without any damage, go to WTO most favoured nation tariffs".
“It’s dreadful.  There will be hold-ups at the border and that will make it impossible to take things out of the ground in Spain this morning and get them onto the shelves in the UK in two days’ time"
“This is so serious we’re talking about civil unrest on the streets.  Within two weeks of no deal this will become a very different country.”

Another chairman said that in the event of no deal there would be “a material increase” in food prices.  Finally, some ministers seem to be waking up to that.”

There was however a contrary view from Malcolm Walker - founder and boss of Iceland – who disputed the warnings from the wider food industry.  He said: “All this scaremongering about stockpiling food - personally I think it’s all bullshit... it’s not in the EU’s interests for there to be no deal.”

The warnings, however, come after International Trade secretary, Liam Fox, and the new Foreign Secretary, Jeremy Hunt, who each have said that Britain could be headed for a ‘no-deal’ Brexit.

John ShuttleworthComment