‘Shrinkflation’ is an early warning of trouble ahead

A dramatic intervention by the former chief executive of supermarket giant Sainsbury’s

IN A small way, shoppers are already noticing the effects of Brexit. I say ‘small’ because so-called shrinkflation is a back-door way for manufacturers to charge more by giving us less for the same price. The shrinking Toblerone is the best known example after its American maker reacted to a post-Brexit slump in the pound by making its chocolate bars ten per cent smaller.

We are now seeing multipacks that have shrunk from six items to five, tubs of ice cream going from 1 litre to 900ml and smaller sausages, among many other examples.

But while shrinkflation can be seen as an early warning of trouble ahead, real inflation that can be felt in the pocket and shows up on the retail price index, is not far behind.

Premier Foods, which owns Bisto, Mr Kipling and Oxo, is already in discussions with supermarkets over Brexit-related price rises of up to five per cent. Others will follow and it is estimated that five per cent inflation will cost the average family £300 a year more for their groceries.

I speak with some knowledge about the retail sector. I was the chief executive of Sainsbury’s for a decade and increased its sales year on year with very little inflation.

I previously worked at Asda and M&S and know how our supermarkets keep prices low by striking supply deals months in advance and hedging against currency changes.

This has provided a period of grace that has shielded shoppers from the full effects of Brexit. Now that it is coming to an end, we urgently need a real debate about the economic cost of the various Brexit options.

The abundance, choice and value we enjoy in our supermarkets has been built on EU’s free movement of goods. As the recent lettuce shortages showed, when this is disrupted,

A hard Brexit will be disastrous for Britain

problems swiftly follow. At the moment, 40 per cent of our food is imported, mostly from the EU, in thousands of trucks that travel through our ports every day without customs checks or tariff calculations.

Anyone returning from a foreign holiday will see the queues at passport and customs for non-EU citizens. Now imagine the scrum at our freight ports if Britain leaves the single market and customs union, as the Government seems to be demanding.

All this needs to be resolved as soon as possible, or chaos will ensue.

Free movement of services is equally important for our financial and legal services sector, which are major contributors to our economic prosperity.

There isn’t a boardroom in the City that isn’t making contingency plans to move staff away from London if ‘passporting’ rights are lost.

Despite long being a eurosceptic, I voted Remain because I believed that staying in Europe and fighting for reform was our best option.

Our 44 years of membership have brought economic prosperity while the leavers seemed unable to articulate a coherent plan – a lack of clarity that has continued with ‘Brexit means Brexit’.

It is argued that the 17million who voted for Brexit must now hold sway. But it is simply not true, as Nigel Farage likes to suggest, that they voted for his version of Brexit. And it’s far from clear they voted for the so-called ‘hard Brexit’ which I believe will be disastrous for Britain.

Deciding what shape Brexit will take is the sort of political conundrum our parliamentary system has dealt with for centuries. Opposition and debate is, after all, precisely why we have a Parliament.

It is time for the debate to begin in earnest.

First, we need to realise that the timing is not opportune. The year ahead promises elections in many of the key countries of the EU, so we don’t even know who we’ll be negotiating with. We also need to recognise that not every detail can be agreed in the two-year timespan, so we need to prioritise the areas that matter most. Every detail will need to be finessed, every negotiating success matched with concessions elsewhere.

Take free movement of people. Last week the Office of National Statistics showed more UK-born residents are in work than ever before, even while significant parts of our economy rely on hardworking Europeans.

For example, more than 57,000 EU citizens work in the NHS, about ten per cent of City workers are from the EU, and around 80,000 EU workers come temporarily each year to work on farms during harvest.

While the Brexiteers might argue we can do that work, the NHS, our care system, farms and food factories cannot function without EU workers. The maths of a cap, or ban, on free movement simply do not add up.

Our economic relationship with the EU, which accounts for nearly half of our overseas trade, will be shaped by the negotiations ahead. I accept that Britain voted to leave, but the terms of Brexit are far from settled.

It is vital therefore that political grandstanding does not overshadow the crucial importance of the economy, jobs and keeping prices low.

That is how the voices of all 46million of the UK electorate can be heard.