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No-deal Brexit to cost US$12b in food tariffs: study
[LONDON] Food and drink imports to the UK could be hit with tariffs of £9.3 billion a year (S$16.7 billion), lifting supermarket prices, if the country crashes out of the European Union (EU) without a deal, according to a study.
If Brexit negotiations between the UK and EU fail to break the current impasse, grocers would face an average tariff of 27 per cent on goods brought in from the EU, according to the report, published Thursday by Barclays Bank. Consumers could see some of that cost passed on in the form of higher store prices, it warns.
"Additional tariffs that are faced by supply chain and retail are significant, and inevitably some element of price increase will likely go to the consumer," Ian Gilmartin, head of retail at Barclays Corporate Banking, said.
The UK imported about £48 billion worth of food and drink products last year, with much of that coming from the EU, the report says. While some manufacturers can move production and financial firms can relocate bankers, supermarkets can't escape the effects of Brexit because they need to stay close to shoppers.
Retailers can try to increase purchasing from local producers. At Tesco's new discount Jack's stores, eight out of 10 items are made in Britain, according to the company.
Representatives for Tesco and J Sainsbury declined to comment on Brexit planning, while Wm Morrison Supermarkets said it's getting ready for whatever happens. "Our customers would be best served by as frictionless trade as possible," Morrison spokesman Julian Bailey said.