Food Bills Set to Rise Even in Best Brexit Outcome, Lords Warn

(Bloomberg) -- Even the best possible trade deal with the European Union after Brexit may not be able to save Britons from paying more for their food, according to a report from a House of Lords committee.

In the best-case scenario, where Britain and the EU agree to no tariffs and few customs barriers, international rules would still oblige the U.K. to step up customs and borders checks, according to the report from the House of Lords’ EU Energy and Environment Sub-Committee. This could choke the U.K.’s transport logistics and raise prices for food imports.

“Regardless of the customs and border arrangements that the U.K. puts in place for imports, EU countries exporting food to the U.K. will have additional checks and documentation to complete,” according to the report Thursday. “It seems probable that the costs associated with this will affect the price of food in the U.K.”

Food Bills Set to Rise Even in Best Brexit Outcome, Lords Warn

If an agreement cannot be negotiated, Brexit is likely to result in an average tariff on food imports of 22 percent, according to the report. While this would not mean that food prices for consumers increase by the same percentage, “there can be no doubt that prices paid at the checkout would rise,” the committee said.

Uncertainty remains over what kind of customs arrangement the U.K. will reach after Prime Minister Theresa May’s latest plans were ripped up by the House of Lords Tuesday, who demanded she keep the U.K. in the EU’s single market.

About 30 percent of all food consumed in Britain comes from the EU, and the country depends especially on Europe for fresh fruit and vegetables, according to the report. Those products are likely to be especially badly hit, it said. “Those who can afford it will be able to buy high-quality local produce. Those who cannot afford that option may well base their diets on cheaper, imported food.”

Brexit is also likely to increase labor costs as food producers may no longer be able to hire EU workers, according to the report.

“Such cost increases may have to be passed on to consumers, or else some businesses may cease to be viable, reducing the U.K.’s ability to produce its own food, with a potential knock-on effect upon availability for consumers.”

©2018 Bloomberg L.P.