No-Deal Brexit to Cost $12 Billion in Food Tariffs, Study Says
(Bloomberg) -- Food and drink imports to the U.K. could be hit with tariffs of 9.3 billion pounds a year ($12.2 billion), lifting supermarket prices, if the country crashes out of the European Union without a deal, according to a study.
If Brexit negotiations between the U.K. and EU fail to break the current impasse, grocers would face an average tariff of 27 percent on goods brought in from the EU, according to the report, published Thursday by Barclays Bank Plc. Consumers could see some of that cost passed on in the form of higher store prices, it warns.
“Additional tariffs that are faced by supply chain and retail are significant, and inevitably some element of price increase will likely go to the consumer,” Ian Gilmartin, head of retail at Barclays Corporate Banking, said in a phone interview.
The U.K. imported about 48 billion pounds worth of food and drink products last year, with much of that coming from the EU, the report says. While some manufacturers can move production and financial firms can relocate bankers, supermarkets can’t escape the effects of Brexit because they need to stay close to shoppers.
Retailers can try to increase purchasing from local producers. At Tesco Plc’s new discount Jack’s stores, eight out of 10 items are made in Britain, according to the company.
Representatives for Tesco and J Sainsbury Plc declined to comment on Brexit planning, while Wm Morrison Supermarkets Plc said it’s getting ready for whatever happens. “Our customers would be best served by as frictionless trade as possible,” Morrison spokesman Julian Bailey said.
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