Brexit may increase food prices by up to 20 per cent
Fans of fish fingers could see the prices of their favourite food shoot up “virtually instantaneously” should Britain crash out of the EU without a deal, the head of Birds Eye in the UK has warned. The frozen food specialist’s managing director for the UK and Ireland, Wayne Hudson, said many food products would be affected by a disorderly Brexit.
Manufacturers would have to pass tariffs of up to 20 per cent onto retailers, who would themselves have to decide how much of the extra cost to pass onto shoppers, he cautioned. Mr Hudson said the uncertainty around Brexit was “seriously delaying our ambitious plans for continued growth” and imposing additional
costs, with four of the company’s senior executives focused entirely on contingency planning.
It remains unclear whether EU27 countries will be “accommodating” to exports of UK manufacturers’ products after Brexit, he warned.
In an article in The Grocer magazine, Mr Hudson said: “There is now a dense fog and a serious sense of unease that the entire food industry is having to navigate. Here at Birds Eye, we are the strongest we have been in years. However, instead of focusing all our energy on making this business even better, an increasing and considerable amount of people and financial resource is being dedicated to Brexit contingency planning and ensuring continuity of supply.”
Speaking on BBC Radio 4’s Today programme, Mr Hudson said: “If we crash out on 29 March without a deal it does mean that World Trade Organisation [WTO] tariffs will be applied. If you look at our portfolio of goods, that could range from anywhere between 2 per cent and 20 per cent. That is a significant new cost.
“We buy fish on a global basis, we make fish fingers in our factory in Germany and we bring those into the UK. We want to continue our investment story, we want to continue to grow our business and expand our capacity. But where we place those investments, with the current situation and the fiasco around Brexit, we can’t decide where to do it until we get clarity.” Mr Hudson said that food manufacturers cannot control prices charged for their products by retailers in shops.
But he added: “If we are faced with substantial tariffs we will have to pass those tariffs on, and in turn our customers will need to decide whether or not they pass those onto consumer and shopper.”
Retailers are warning that “there isn’t the margin in the supply chain to absorb any more tariffs”, he said. Writing in The Grocer, Mr Hudson dismissed claims from pro-Brexit politicians that warnings of the possible effects of EU withdrawal without an agreement amounted to “scaremongering”.
“The brutal fact is that, if we leave the EU without a deal, food prices will increase virtually instantaneously as WTO tariffs would apply,” he said.
“Scaremongering? Absolutely not. What’s really scary are the politicians who claim it is.”
For low-income families most vulnerable to food price increases “a no-deal Brexit holds no positive outcome – a fact that politicians seem to be ignoring in their self-serving posturing,” he said.
Birds Eye are the latest company to issue dire warnings about the havoc a no-deal Brexit would unleash. On Sunday, a senior Airbus executive said a disorderly withdrawal from the EU would be “catastrophic” for the aerospace industry.
Her firm had spent “tens of millions of euros” trying to prepare, Airbus’s senior vice president Katherine Bennett told the BBC. “There is no such thing as a managed ‘no deal’, it’s absolutely catastrophic for us,” she said. “Some difficult decisions will have to be made if there’s no deal.”
In recent days, motoring bodies have warned the import tariffs following a no-deal Brexit could “destroy” Britain’s car industry, while a group co-ordinating contingency planning in London said the government needed to “get its act together” to prevent panic-buying of food, fuel and other essentials.