UK retail warns shoppers face higher prices if no EU trade deal

On Friday, Britain’s retail industry advised a post-Brexit trade deal for the UK and Europe, as without tariff-free trade, it is highly likely that consumers will face higher prices from next year.

In addition to that, UK’s retail industry, like British health and beauty retailer Boots, British brands like John Lewis and Harrods, has already announced thousands of job losses due to the COVID-19, because more and more shoppers do not choose to go out for shopping anymore.

Boots, in particular, is planning to further cut 4,000 jobs and close 48 opticians stores throughout the UK, as it was heavily affected by the COVID-19 crisis. Walgreens Boots Alliance, the owner of the retailer, said on Thursday that “its most significant COVID-19 impact had come in Britain, with footfall down 85% in April, forcing it to take an impairment charge of $2 billion (1.5 billion pounds)”.

However, the next stage of the Brexit process has a further challenge awaiting British retailers.
Brexit happened in January and, at the moment, is in a standstill transition period with the bloc to give the two sides time to negotiate a new relationship in everything from trade to security.
Last week, both sides stated that, while they wanted an agreement, they could see Britain leaving the transition period without a trade deal.

Almost 80% of all British food imports come from the EU. Also, EU imports affect drastically supply chains for fashion, homeware, and other retail sectors. In May, the UK government published its new tariff schedule, which would apply from 2021 if a deal was not agreed upon.

Under the schedule, 85% of foods imported from the EU will face tariffs of more than 5%, including 48% on beef mince and 16% on cucumbers. The average tariff on food imported from the EU would be over 20%. British Retail Consortium (BRC) said “Given the highly competitive nature of retail, the industry could not absorb all these increased costs, meaning the public would face higher prices”. “Many UK shoppers experienced disruption in the run up to (coronavirus) lockdown; without a deal, the public may face an even bigger challenge at the end of the transition period,” said Andrew Opie, the BRC’s director of food and sustainability. “With the clock ticking down to 31st December, the government must put consumers first and agree a deal that avoids tariffs and minimises the impact of non-tariff barriers.” UK retailers, already struggling with high rents, business taxes, tight margins, and online competition, were particularly crushed by the lockdown and data shows shoppers are hesitating to enter stores even as restrictions ease.

By Maria Peftouloglou