Supermarkets Warn Government of Empty Shelves in No-Deal Brexit

(Bloomberg) -- The U.K.’s biggest supermarket companies have joined forces to warn the government of significant disruption and rising food prices if Britain leaves the European Union without a deal.

Retail giants including J Sainsbury Plc, Walmart Inc.’s Asda, Marks & Spencer Group Plc and John Lewis Partnership Plc’s Waitrose have signed a letter from the British Retail Consortium to members of Parliament, warning that stockpiling fresh food is impossible.

Tariffs under the World Trade Organization rules to which the U.K. would revert without a deal are also a big concern for the supermarkets, which say they would “greatly increase import costs, which could in turn put upward pressure on food prices” and would have a “devastating impact on our own farmers.”

“We anticipate significant risks to maintaining the choice, quality and durability of food that our customers have come to expect in our stores, and there will be inevitable pressure on food prices from higher transport costs, currency devaluation and tariffs,” warn the signatories, which also include Lidl, Co-Op, Pret A Manger, Yum Brands Inc.’s KFC, McDonald’s Corp. and Costcutter.

The letter was sent just ahead of key parliamentary votes Tuesday on a series of Brexit measures. The first amendment, led by the Labour Party’s Yvette Cooper, determines whether no-deal will be ruled out as an outcome. The timing suggests the major retailers are lobbying the government to approve this amendment, which businesses would greet with relief.

The letter also highlights the reliance of retailers’ supply chains on Europe, with one-third of food in the U.K. coming from the EU. In March, when Britain is set to leave the bloc, 90 percent of lettuces, 80 percent of tomatoes and 70 percent of soft fruit is sourced from the EU, retailers wrote. A main concern is disruption at the crossing between Calais, France, and Dover, England, with government data suggesting freight across the strait could be reduced by 87 percent.

The retailers say they are stockpiling where possible, but that all frozen and chilled storage is already being used and there is limited warehousing left. They are also attempting to find alternative supply routes, but there are few options and not enough ferries available.

The letter comes almost two months after Bloomberg reported that the big four supermarket chains, including Tesco Plc and Wm Morrison Supermarkets Plc in addition to Asda and Sainsbury, were asking their suppliers to stock up over concerns that half their shelves would be empty if there were a no-deal Brexit.

©2019 Bloomberg L.P.

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