There has been a lot of talk recently that a no deal Brexit would not be too bad for consumers. After all, retailers and their suppliers coped with Covid and consumers got the food they needed, so what could be worse? Well, there are three things that will make a difference and it is bad news for consumers, who will see higher prices and reduced availability.
Firstly, we will be paying tariffs on EU food, adding cost on everything from tomatoes to cheese. 80% of our food imports come from the EU and the tariffs are particularly high on agricultural produce. We estimate the average tariff on imported EU food is 22% and can be over 40% for beef and cheese. As this food isn’t available in the UK and costs are already at a minimum, it is inevitable prices will rise. Even in the shortages during Covid inflation was low, but that won’t be the case once tariffs are added.
2 Supply Chain Disruption
Supplies were not affected during Covid; pasta supplies from Italy actually increased despite the country being badly affected by the virus. There were short term problems, but this was due to excessive buying in supermarkets, not a lack of products in the supply chain. In a no deal, our key supply routes across the channel will be disrupted at a time we heavily rely on imports. Even the Government’s best estimate is a reduction by a third in imports across the Channel due to new border checks, whereas crossings were unaffected during Covid. Disruption to the supply chain means a reduction in availability, shorter shelf life and more pressure on prices.
3 Time of the Year
The pressure on supply chains from consumers in late February and early March was intense as we were still reliant on European imports, but the pressure will be even greater on 1st January. Firstly, imports make up an even greater proportion of our food at that time; 90% of our lettuces, 80% of our tomatoes and 70% of our soft fruit are imported then, and the vast majority from or through Europe. Secondly, retailers will not be able to stockpile in advance as all capacity is taken in preparing for Christmas and the New Year period. January is the worst time for a retailer to cope with supply disruption which could be exacerbated by a return to excessive demand.
All in all, it is wrong to suggest that because retailers coped with Covid they will be able to do the same with a no deal Brexit. They coped because they invested in their business and had fantastic support from their workers but, crucially, the food in the supply chain continued to flow unaffected and at the same price. Huge tariffs and disruption to supplies are beyond the control of any retailer. Unfortunately, consumers will bear the brunt of this in less availability and higher prices which is why a deal with zero tariffs and an orderly Brexit is so important.