Expert View

Nobody voted Brexit for bigger shopping bills

by Andy Lebrecht | 22.01.2019

Andy Lebrecht is a former Director-General for Food and Farming at Defra and UK Deputy Permanent Representative to the EU.

Brexiters assert that crashing out with “no deal” is the Brexit people voted for in 2016. But they ignore many of the likely consequences of falling back on WTO terms. For example, are Brexiters arguing people voted for bigger shopping bills?

Leaving the EU without a deal is very likely to result in higher food prices for consumers. The UK imports just over half of its food, and 60% of those come from the EU with a further 11% under EU agreements with over fifty non-EU countries. These trade deals will end if we crash out.

What’s more, should sterling lose value following a no-deal Brexit, as seems likely, then all food imports will be more expensive.

But there are two other important reasons why food prices will rise if we crash out with no deal.

Tariffs on imported EU food

First, the UK will be obliged to hike up tariffs on EU food imports if it is to have any hope of maintaining leverage in future trade negotiations with non-EU countries. This is to do with the WTO’s “most favoured nation” rules, which do not allow countries to discriminate between trading partners when they set tariffs unless they have a free trade agreement – which we will lose after no deal. To keep EU tariffs at the current level of zero, and therefore EU imports cheap, the UK would have to slash its tariffs for every other WTO country.

But then the offer to lower tariffs cannot be used in any future trade negotiations with those countries. So if the UK wants to keep its current tariff levels with non-EU countries, and ensure negotiating leverage in the future, it must apply those same levels to imports from the EU.

This is a particularly big deal because countries like the USA, New Zealand and certain South American countries see improved access to the UK’s food market as a key prize from trade negotiations with the UK.

All this will hit consumers in the pocket. EU food tariffs are relatively high, averaging some 22% according to the UK Trade Policy Observatory, and as high as 45% for dairy products, 56% for beef and 75% for sugar. This does not mean that food prices will rise by these percentages when tariffs are applied to imports from the EU. But the tariff rises will have a significant impact.

Food chain delays

The second point is that, as members of the EU, food  currently comes into the UK with no customs checks, no delays, no need for veterinary inspections and no non-tariff measures.

But a no-deal Brexit will require documentation and physical checks for tariff purposes, for quality and safety reasons and to ensure veterinary and phytosanitary rules are being met. All these will impose delays and additional costs, which will feed through to consumers.

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When the costs of higher tariffs, non-tariff measures and more checks are added together, the UK Trade Policy Observatory estimates UK food prices would rise under a no-deal Brexit by an average of 7%. These increases would be on top of any price changes due to other factors, such as currency movements or changes in the price of oil.

graph of food price rises after no deal Brexit

source: UK Trade Policy Observatory

Food price rises of this scale would affect everyone, but especially those most vulnerable families whose circumstances require them to spend a higher proportion of their income on food.

Why don’t we just grow our own?

Brexiters will doubtless argue that UK farming will rise to the challenge and expand production, thereby offsetting the price rises in the medium term. Again, this glosses over the challenges: land is in limited supply, farming and food processing are highly dependent on migrant labour from EU countries, increasing production would require more imports of things like fertiliser and animal feed which would also face higher tariffs.

What’s more, a significant increase in UK food production would mean more intensive farming. That could potentially harm the environment and animal welfare, which may be resisted by many citizens.

It is clear nobody voted in 2016 for more expensive food. Bigger shopping bills would be a particularly cruel reward for those who put their trust in Brexiters’ promises of a better future.

That is not to say we should support any softer form of Brexit, the successful negotiation of which is still highly uncertain. The only way to ensure we can continue to enjoy tariff- and barrier-free food imports from the EU is a People’s Vote, giving people an option to stick with the much better deal we have now inside the EU.

Edited by Luke Lythgoe

6 Responses to “Nobody voted Brexit for bigger shopping bills”

  • This should be compulsory reading for all MP’s at Westminster, not to speak of Brexiters generally.

    Material such as this should be the subject of debate on TV and radio with selected participants on what is referred to as ” both side of the divide “. Why has this not been done? indeed it should have been done before the EU referendum.
    We can only be saved by facts and not emotions though nothing could be more emotional than to consider the amazing success of the EEC/EU over the last 50 odd years.

  • In a way funny, but we are not allowed to call Brexiteers and their mental output stupid. Nevertheless, whatever ill-thought through facts or inventive farts one reads coming from that corner, it just doesn’t make sense and is generally going to cost the UK, or what’s left of it in the near future, dearly. There appears to be no plan to deal with that in Brexiteer circles, as much as there never was a plan to deal with the future post-Brexit anyway. Just what is going on? Who put what in their drinking water?

  • Thanks for excellent article explaining WTO rules. Recently, I saw a comment by a Brexiteer stating that until a trade deal is signed with EU, free trade with EU under current pre-Brexit conditions is allowed for up to 10 years under GATT rules. Is this correct?

    Jim Clarke.

  • We “Dug for Victory” during WWII, with every scrap of free land and peoples’ gardens turned over to growing vegetables and other crops. However back then the population was only 40 million, now it’s 65 million so obviously we can’t grow enough food to support ourselves.

  • It’s not just prices. It’s jobs, working conditions and practices, sluggish economy and reduced government income, fewer migrants to work in the NHS and carer jobs etc etc…..makes the austerity years look fairly rosy compared to the next ten years. Personally at 72 I’m not comforted by Rees-Mogg telling me it might take fifty years before we see the benefit of Brexit. Silly old me.

  • But people knew “what they have voted for”. It must not be a suprise for them. They must really enjoy themselves now and can not wait to go for a weekly shopping after 29th of March and spend more money than usual.