UK retailers warn of price hikes if no-deal Brexit
The UK’s retail industry urged the UK and European negotiators to reach a post-Brexit trade agreement, warning that consumers could face higher prices without tariff-free trade.
Reuters reports that the UK retail sector announced thousands of job losses due to the coronavirus crisis as shoppers remain wary of returning to the high street. The next stage of the Brexit process could pose further challenges to the already struggling sector.
Britain left the EU in January 2020 and is currently in a transition period with the trading bloc. During this time, both sides are aiming to elucidate the parameters of their new relationship in everything from national security, regulations and trade.
Last week's round of talks was cut short, with both sides saying that, while they wanted an agreement, they had yet to overcome the gulf in positions that could see Britain leaving the transition period without a trade deal.
Four-fifths of UK food imports come from the EU and EU imports also play a major role in supply chains for fashion, homeware, and other retail sectors.
In May, the UK government published its new tariff schedule, which would apply from 1 January 2021 if a deal was not agreed.
Under the schedule, 85 percent of foods imported from the EU will face tariffs of more than 5 percent, including 48 percent on beef mince and 16 percent on cucumbers. The average tariff on food imported from the EU would be over 20 percent.
Given the highly competitive nature of retail, the industry could not absorb all these increased costs, meaning the public would face higher prices, the British Retail Consortium (BRC) said.
“Many UK shoppers experienced disruption in the run up to (coronavirus) lockdown; without a deal, the public may face an even bigger challenge at the end of the transition period," said Andrew Opie, the BRC's director of food and sustainability.
"With the clock ticking down to 31 December, the government must put consumers first and agree a deal that avoids tariffs and minimises the impact of non-tariff barriers."
UK retailers, already struggling with high rents, business taxes, tight margins and online competition, were particularly hammered by the lockdown and data shows shoppers are reluctant to enter stores even as restrictions ease.
