Percy Pig has emerged as one of the first casualties of Brexit red tape, with Marks & Spencer warning that the famous pink sweets it sells in its Irish stores could be hit with new import taxes.
The bestselling sweets are among the more than 2,000 products sold in its food halls affected by the “rules of origin” regulations set out in the trade deal struck with the EU. The rules decide whether import taxes, called tariffs, must be paid based on where the product’s ingredients come from and it has been manufactured.
Steve Rowe, the chief executive of M&S, gave the example of its bestselling Percy Pig sweets, which are manufactured in Germany and brought to the UK before being re-exported to Ireland – a journey that would now be subject to import taxes.
“About a third of the products in our food business are subject to complex rules of origin around componentry and how much has been altered in the UK,” explained Rowe. “Depending on that, there is a variable rate of tariff on goods. Tariff-free does not feel like tariff-free when you read the fine print.”
The UK’s free trade agreement has spared Marks & Spencer’s domestic business from tariffs but would “significantly impact” the retailer in Ireland, where it has 18 stores, as well as the Czech Republic and France. The “scope and complexity” of the new rules meant M&S, and other retailers, would have to “find an expensive workaround”, Rowe said. The rules of origin do not affect products sold in its stores over the border in Northern Ireland.
The British Retail Consortium said at least 50 of its members were facing potential tariffs for re-exporting goods to the EU. William Bain, the BRC’s trade policy adviser, said it is trying to come up with short-term options and “seeking dialogue with the government and the EU on longer-term solutions to mitigate the effects of new tariffs”.
He added: “We need a solution which genuinely reflects the needs of UK-EU supply and distribution chains for goods.”