A “no-deal” Brexit could cost United Kingdom retailers and their supply chain £9.3bn (R180 bn), according to a new Barclays Corporate Banking report.
Last year the UK imported £48 bn (R931 bn) worth of food and drink, which accounts for approximately 40% of the total UK market. Some 71% of these imports originated from within the EU and entered the UK free of customs duties and other trade costs. The Barclays report, ‘Scale, Disruption and Brexit – a new dawn for UK food supply chains’, found that in a no-deal Brexit food retailers would be affected by a new average tariff of 27% on food and drink goods entering from the EU, significantly more than the 3-4% levy that would hit non-food products.
In addition, every consignment of goods from the EU will require a customs declaration which starts at a minimum of £50 (R970). “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,” says Ian Gilmartin, head of retail at Barclays Corporate Banking. The Barclays report shows 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 such as white sugar, and 9.7% for primary products and raw materials like bananas.
Hardest hit will be those products that attract both a category tariff as well as a specific duty tariff, such as frozen beef with a specific duty of 298%. Common cooking products also face steep duties including beef cuts at 101%, cream at 81% and garlic at 71%. Further costs could also mount under a hard Brexit.
In addition to customs declarations comes the burden of complying with stringent EU Sanitary and Phytosanitary (SPS) regulations, which could be the equivalent of paying an extra 8% in duty tax on EU food and drink imports.
