A no-deal Brexit would quickly trigger a jump in food prices and a reduction in choice of products, British retailers have warned in the latest plea by big business against leaving the EU without an agreement.
A letter from bosses of some of the country’s leading retail chains to MPs urged parliament “to find a solution that avoids the shock of a no deal Brexit on March 29”.
“While we have been working closely with our suppliers on contingency plans, it is not possible to mitigate all the risks to our supply chains and we fear significant disruption in the short term as a result if there is no Brexit deal,” said the executives, who included the bosses of J Sainsbury, Asda, Waitrose, Marks and Spencer and Lidl, along with convenience chains Costcutter and the Co-op.
The letter, co-ordinated by the British Retail Consortium, said they anticipated “significant risks to maintaining the choice, quality and durability of food that our customers have come to expect in our stores,” adding: “There will be inevitable pressure on food prices from higher transport costs, currency devaluation and tariffs.”
The UK heads of sandwich chain Pret-a-Manger, KFC and McDonald’s also signed the letter. Aldi, Wm Morrison and Tesco did not, but have expressed similar sentiments around the impracticalities of stockpiling.
The letter followed similar warnings this month from big manufacturers, including Airbus and Jaguar Land Rover, as deadlock over Brexit in parliament has raised the possibility of the UK crashing out of the EU without a deal.
The retailers’ letter stressed that the impact of leaving the EU without a withdrawal agreement would be immediate, owing to the time of year. “In March the situation is more acute as UK produce is out of season: 90 per cent of our lettuces, 80 per cent of our tomatoes and 70 per cent of our soft fruit is sourced from the EU at that time of year.”
It also said that there would be severe delays even if, as some MPs have suggested, the UK were to just throw open its borders. “There will still be major disruption at Calais as the French government has said it will enforce sanitary and customs checks on exports from the EU, which will lead to long delays.”
Andrea Jenkyns, a Tory Eurosceptic MP, dismissed the letter as scaremongering and said retailers would have “great opportunities” if Britain left the EU on World Trade Organization terms. “I worked in retail and ran my own businesses for 18 years. These pessimistic and increasingly wild claims do a great disservice to those putting them forward,” she said.
The letter said only around a 10th of food imports were currently subject to any tariffs, meaning that if the UK were to revert to “Most Favoured Nation status” under WTO rules, as currently envisaged in the no-deal scenario, “it would greatly increase import costs, which could in turn put upward pressure on food prices”. Setting import tariffs at zero “would have a devastating impact on our own farmers, a key part of our supply chains”.
The letter is not the first intervention by the BRC. In July last year, BRC chairman Richard Pennycook and chief executive Helen Dickinson sent a similar letter to UK prime minister Theresa May and Jean-Claude Juncker, president of the European Commission. It warned that a no-deal Brexit could result in “gaps on shelves” and food “rotting at ports.”
The latest letter reiterated previous comments by retail chief executives that stockpiling is not a realistic solution. “All frozen and chilled storage is already being used and there is very little general warehousing space available in the UK,” it said. “Retailers typically store no more than two weeks’ inventory and it becomes difficult to restock stores if the supply chain is disrupted.” Tesco recently confirmed that it has retained refrigerated containers for the rest of the year to store additional volumes of frozen food.
Additional reporting by Jim Pickard