New research reveals that a ‘no deal’ hard Brexit would likely cost the retail industry of the United Kingdom £7.8bn in additional tariffs.
According to law firm Squire Patton Boggs and analyst Retail Economics, the food and drink industry of the United Kingdom will be hit with higher tariffs which are greater than any other sector should Britain fail to agree on a trade deal with the European Union, with tariffs of a maximum of 80 percent on imported goods.
Nearly three-quarters of the food and drinks imports of the United Kingdom are from the European Union, which totalled at £30bn last year.
Meat and dairy products could be imposed with tariffs of a maximum of 80 percent, translating to additional costs amounting to £6bn for businesses. Chocolates could be slapped with tariffs of approximately 30 percent.
The research warns that alternative non-EU sources of imports of food and drink will be limited by high tariffs and some other non-tariff related barriers.
According to the research, retailers of clothing and footwear face the most disruption as compared to all other non-food retailers, paying a maximum of £1.1bn more for imports.
Retail Economics stare that a new immigration system following Brexit must make sure that the retail industry of the United Kingdom has access to non-graduate citizens of the European Union. Failure to meet the demand for skilled workers could see retailers from the United Kingdom lose their competitive edge with an increase in costs of recruitment.
The head of Retail Industry Group at Squire Patton Boggs, Matthew Lewis, called for “greater reassurance” for the 170,000 citizens of the European Union who are currently working in the retail industry of the United Kingdom.
He stated: “For all retailers in the UK now is the time to start scenario planning, to consider their contracts with suppliers, to assess risk-exposure to possible new compliance rules and customs controls and logistical delays, and to review how best to support staff and identify solutions for longer-term recruitment.”
Richard Lim, the chief executive of Retail Economics, stated: “The retail industry is already delicately poised between an outlook of softening consumer demand and mounting cost pressures, evidenced by recent high-profile retail administrations.”
Lim said that “additional costs of this magnitude will amount to a ‘tipping point’, with some retailers unable to remain commercially viable.”