As Brexit negotiations continue, a new report shows retailers could face additional tariffs totalling £9.3bn per year for food and drink products imported from the EU if a settlement isn’t reached. The new Barclays report, Scale, Disruption and Brexit – a new dawn for UK food supply chains? shows that in a no-deal Brexit, food retailers would be affected by a new average tariff of 27% on food and drink goods entering from the EU, significantly more than the 3-4% levy that would hit non-food products. Additionally, every consignment of goods from the EU will require a customs declaration which starts at a minimum of £50.
Last year, the UK imported £48 billion worth of food and drink, approximately 40% of the total UK market. Of these, 71% originating from within the EU entered the UK free of customs duties and other trade costs¹. While a free trade deal or the Chequers option, would help the food industry avoid tariffs and related duties, a no-deal Brexit could mean significantly higher costs for retailers and consumers.
Ian Gilmartin, Head of Retail at Barclays Corporate Banking, comments: “The food and drink industry is one of the country’s most important sectors, employing millions of people across the UK. For the good of both UK business and consumers, the potential impact on our producers and grocery retailers should be front and centre of Brexit negotiations.
“Some products would avoid tariffs, even in a no-deal scenario, but for most goods the effect of an increased tariff burden would be extremely damaging, and cheaper goods would be the hardest hit. 71% of our imported food and drink comes from the EU, and 60% of our exports go to the EU. A positive agreement on trade is essential if we are to protect UK exporters and avoid significant price rises for UK consumers.”