UK retail says no-deal Brexit will see 'food rotting at ports'

[July 05, 2018]  LONDON (Reuters) - The British government and the European Union must avoid a no-deal Brexit "at all costs" as this would clog up food supplies, raise prices and throw retailers out of business, the UK retail industry's lobby group said on Thursday.

The warning from the British Retail Consortium (BRC) came a day before British Prime Minister Theresa May hosts ministers at her country residence to try to reach agreement on how to push on with the all-but-stalled Brexit talks.

In a letter to May and the EU's Brexit negotiator Michel Barnier, BRC chairman Richard Pennycook said failure to reach a deal that protects the free flow of goods after Brexit on March 29, 2019, would harm both UK consumers and EU-based producers.

"Failure to reach a deal – the cliff edge scenario – will mean new border controls and multiple ‘non-tariff barriers’, through regulatory checks, that will create delays, waste and failed deliveries," he said.

"The consequences of this will be dramatic for UK consumers. It is likely that we will see food rotting at ports, reducing the choice and quality of what is available to consumers."

The BRC's intervention follows similar warnings from several other businesses, including Jaguar Land Rover [TAMOJL.UL], Airbus <AIR.PA>, Siemens <SIEM.NS> and John Lewis [JLPLC.UL].

Pennycook, the former boss of the Co-operative Group, noted that 50 percent of Britain's food is imported, and of that 60 percent comes from the EU.

He said that in 2016 3.6 million containers from the EU passed through UK ports, equating to more than 50,000 tonnes per day of food. These goods can currently enter the UK with minimal delay, allowing for frictionless trade.
 

 An EU flag and Union flag are seen flying together near the Houses of Parliament in London, Britain, December 8, 2017. REUTERS/Toby Melville

HIGHER PRICES

Pennycook said food and beverage products would face an average increase in the cost of importing from the EU of up to 29 percent from non-tariff barriers alone and warned that many of these increases would be passed on to consumers in higher prices.

The BRC has also estimated that more than 12,500 small retail businesses will be at risk of going bust, while EU businesses face losing 21 billion pounds ($27.8 billion) of agri-food exports to Britain.

Pennycook said time was running out for the food supply chain as EU farmers needed to know who their customers would be before planting their crops or raising their animals this autumn, for delivery to UK consumers next spring.

At Friday's meeting in Chequers, May's country residence, the prime minister is expected to propose a new plan to ease trade and offer Britain more freedom to set tariffs after Brexit.

(Reporting by James Davey)

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