Supply chain · 27 September 2018

Food industry faces £9.3bn tariff bill under a no-deal Brexit

Last year, the UK imported £48bn worth of food and drink

Food retailers and their suppliers could face a £9.3bn blow under a “no-deal” Brexit, a study has claimed.

A new Barclays Corporate Banking report has revealed that a failure to reach any Brexit deal will create an average tariff of 27% on products imported from the EU for food and drink supply chains.

There would be varying tariffs for different types of products. For example, the Barclays report showed that fully processed food and drink products, such as orange juice, will attract the highest tariff rate of 31% compared to 29.5% for semi-processed food and drink such as white sugar, and 9.7% for primary products and raw materials like bananas.

The report – Scale, Disruption and Brexit – a new dawn for UK food supply chains? – said the new tariff would be significantly more than the 3-4% levy that would hit non-food products. Additionally, every consignment of goods from the EU will require a customs declaration which starts at a minimum of £50.

Last year, the UK imported £48bn worth of food and drink, approximately 40% of the total UK market. Of these, 71% originating from within the EU entered the UK free of customs duties and other trade costs.

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Barclays warned that with grocery margins typically around 3 – 5%, the additional cost of a “no deal” is likely to end up being passed on to consumers.

“The food and drink industry is one of the country’s most important sectors, employing millions of people across the UK. For the good of both UK business and consumers, the potential impact on our producers and grocery retailers should be front and centre of Brexit negotiations,” said Ian Gilmartin, head of retail at Barclays Corporate Banking.

“Some products would avoid tariffs, even in a no-deal scenario, but for most goods, the effect of an increased tariff burden would be extremely damaging, and cheaper goods would be the hardest hit. 71% of our imported food and drink comes from the EU, and 60% of our exports go to the EU. A positive agreement on trade is essential if we are to protect UK exporters and avoid significant price rises for UK consumers.”

Read more about the impact of Brexit on small UK businesses:

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