Supermarkets and shoppers will be hit with a £3.1 billion annual bill on food and drink if the UK can’t secure a Brexit deal, it has been warned.
The forecast comes as Boris Johnson has warned there’s a “strong possibility” that we will crash out of the EU without a trade agreement at the end of the transition period on December 31.
The price of a grocery shop is expected to increase in the no-deal scenario, according to business groups.
Supermarket chains will face import taxes on goods imported from the EU, which are expected to particularly impact fresh food, such as fruit and vegetables.
While retailers may swallow some of the impact, it is understood that grocers intend to increase some prices on everyday staples to mitigate the tax increase in a no-deal scenario.
The British Retail Consortium (BRC) said that 85% of foods imported from the EU are expected to face tariffs of more than 5%.
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John Allan, chairman of Tesco, warned that food bills could climb by 5% on average in the event of a no-deal scenario.
If a Brexit deal is not struck, new tariff rules are set to be implemented from January 1.
The BRC said this would result in an average tariff of more-than-20% on food imported from the EU, including 48% on beef mince, 16% on cucumbers, 10% on lettuce and 9% on tomatoes.
The Food Foundation found that, if tariff increases are passed directly on to UK consumers, the average British family would pay 4% more for their fruit and vegetables from the start of next year.
Checks and delays at the border could also result in some of these products reaching UK customers with a shorter shelf-life.
Other items such as toys and clothes could also be particularly impacted by price increases and disruption in the distribution process.
The British Toy and Hobby Association said toy manufacturers are facing a “drastic price increase” on freight due to a shortage of capacity and containers due to Brexit.
A Government spokesperson said: “As we have seen this year, the UK has a large, diverse and highly resilient food supply chain – which has coped well in responding to unprecedented challenges.
“We are in regular contact with the food industry to support its preparations for a range of scenarios, and will continue to work closely with them to ensure people across the country have the food and supplies they need.”
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Talking about the proposed deal, the Prime Minister said the “deal on the table is really not at the moment right”, and it would leave the UK vulnerable to sanctions or tariffs if it did not follow the bloc’s new laws.
He said the current proposals would keep the nation “kind of locked in the EU’s orbit”, but insisted negotiators would “go the extra mile” in trying to get a treaty in time for December 31.
But Mr Johnson said he told his Cabinet on Thursday evening to “get on and make those preparations” for a departure without a deal in place, or in an “Australian relationship” as he puts it.
He said: “I do think we need to be very, very clear, there is now a strong possibility – a strong possibility – that we will have a solution that is much more like an Australian relationship with the EU than a Canadian relationship with the EU.”