Shop prices hinge on Brexit deal, shops warn
Consumers are being warned that shop prices may have to rise substantially if the Government fails to secure the right Brexit trade deals for the UK.
Average duty on imported meat could rise to 27% if the UK ended up trading under World Trade Organisation rules, the British Retail said in a letter to International Trade Secretary Liam Fox.
It cited other examples of clothing and footwear tariffs rising up to 16% for all EU imports versus the current zero-rating, and a 14% rise in costs for importers of Chilean wine.
The BRC said that by the UK potentially defaulting to WTO rules, retailers would be unable to absorb such cost increases.
Launching the BRC’s Brexit campaign, its chairman Richard Baker said: “We will be supporting the Government through this complex and difficult process, helping them analyse how increased cost pressures on retailers could mean higher shop prices and identifying any opportunities for new trade deals that could benefit individuals and families.
“The retail industry is the UK’s biggest importer, and has huge experience of importing from every corner of the world.”
Strong competition combined with consumers tightening their purse strings have helped keep a lid on UK shop prices in recent years, particularly in the grocery sector where the supermarket price war means prices are still falling.
The BRC said it had been achieved at a time of rising costs, though the collapse in the value of the pound, which reflects concerns over the UK’s trading future, was yet to be reflected in stores.
Because it can take many years to negotiate trade deals, the organisation said the UK could help mitigate future cost increases by adopting its own generalised trade preferences scheme.
The current EU model allows products from developing nations to be exempt from duties on their exports to the bloc.
The Government plans to trigger Article 50, the formal process for leaving the EU, at the end of March.
It then has two years to negotiate the UK’s exit terms.
If that time expires before a trade deal is completed, the country defaults to the WTO rules.
A report, in August, by the Institute for Fiscal Studies calculated that while leaving the EU would free the UK from an estimated £8bn a year in budget contributions, it said the loss of trade through losing access to the single market could hit tax receipts by a larger amount.