British retailers warn of risks of 22% tariff on EU food without Brexit deal

British shoppers could face an average tariff of 22% on food from the EU if British prime minister Theresa May fails to reach a trade deal with Brussels before Britain leaves in two years time, retailers said.

Britain currently pays no tariffs on the €24bn of food it imports from elsewhere in the EU, such as Italian mozzarella.
Britain currently pays no tariffs on the €24bn of food it imports from elsewhere in the EU, such as Italian mozzarella.

Nearly 80% of British food imports come from EU states and if no trade agreement is struck, Britain and the EU would have to treat each other as WTO members.

“Such a scenario would put upward pressure on consumer food prices,” said the British Retail Consortium, which represents big supermarkets and other stores. UK food prices are already rising at their fastest rate in about three years, as sterling’s fall since June’s Brexit vote pushes up import costs.

Weaker consumer demand in the face of higher inflation is the major reason why most economists expect Britain’s economy to slow this year. As an EU member, Britain pays no tariffs on the €24bn a year of food it imports from elsewhere in the bloc, but after it leaves, the default option would be to levy standard tariffs set by the World Trade Organisation.

These tariffs rise as high as 46% for Italian mozzarella cheese, and around 40% for supermarket staples such as Irish beef and cheddar cheese. Dutch tomatoes would face a 21% levy — though Britons could turn to drink instead, and pay just 4% extra for French wine. Given the balance of food imports, the BRC estimates the average increase on tariffs would be 22%. Ms May has said she aims to reach a comprehensive free trade deal with the EU over the next two years — and called a snap election for June 8, which, she said, would strengthen her negotiating mandate. However, she has not ruled out quitting without a deal if the EU fails to offer Britain good terms.

A poll of economists published this week pointed to a roughly one-in-three chance that Britain will default to WTO rules.

Reuters

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