No-Deal Brexit Could Cause Rise In Food Prices

Food prices in the U.K. is expected to spike unless the government settles a Brexit deal with Europe that eliminates tariffs.

Nearly half of imported food and other goods from Europe could have additional tariffs tacked on starting in January 2021 if there is a no-tariff-deal Brexit, Kalkin Media reported.

The U.K. government estimates total border tariffs could escalate into billions of pounds. Credit-rating agency Fitch expects that with limited progress on U.K.-E.U. trade discussions, the two may progress to the World Trade Organisation’s (WTO) conditions by 2021.

While food prices may be going up, just how high the jump may be will be determined by the magnitude of specific imports, so different food and beverage prices will vary.

Food prices in the U.K. will also change from season to season, according to Kalkin Media.

Imports of fresh produce are typically higher during the nonpeak seasons of winter and spring. Much of the U.K.’s fruits and vegetables comes from Europe; for instance, about 90% of imported lettuce comes from Europe.

Around 50% of imported food in the U.K. comes from Europe, Kalkin Media reported. The U.K. government estimates most food prices will be affected by a 5% tariff.

Heightened food prices during a potential no-deal Brexit will be adding to the difficulties that Britons are facing during the coronavirus pandemic. People are losing jobs and businesses, while the economy is struggling. 

David Potts, the chief executive of one of the U.K.’s largest supermarkets — Morrisons — has given a warning about rising food prices, The Guardian reported.

“From our point of view representing British consumers we would like the government and the leaders of the country to negotiate a deal that includes no tariffs U.K. to Europe or Europe to the U.K. because tariffs do drive inflation,” Potts said. 

According to Morrisons, the supermarket is has a good relationship with farmers and it operates its own food-processing plants. The supermarket could sufficiently handle a no-deal Brexit because about two-thirds of the supermarket’s products are U.K.-made.

The problem is mostly going to deal with fresh produce that is imported.

If there is a no-trade deal for Brexit, sustainability could become a problem.

Some fear that the U.K.’s food supply will be hindered because about 33% of the U.K.’s food comes from the European Union, according to advocacy group Sustain.

If there are any slowdowns in importing over the tariff discussions, the U.K.’s supermarkets could feel a pinch. Smaller food businesses may suffer more than large chains. 

The U.K. farming unions fear a no-deal Brexit will have an effect on both food prices and employment.

Agri-food supplies £113 billion to the U.K. economy and 13% of U.K. employment is in the food and farming industry, according to Sustain. Farmers’ livelihoods may be compromised.

Low-income families may feel the burden of a no-deal Brexit, too.

On top of areas that are vulnerable to food shortages, low-income families may be hit hardest by rising food prices. If food supplies are low, hospitals and care homes may struggle to provide meals as usual.

So far the U.K. government has remained tight-lipped on addressing these challenges for consumers and farmers alike.

After the setbacks that the coronavirus pandemic has caused the economy, tariffs on food prices could be even more disastrous.

What is your opinion about the potential for food prices to rise in the U.K.? Tell us how you feel in the comments.

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