U.S. Markets

'No-deal' Brexit could cost food retail industry $12 billion: Barclays study

FILE PHOTO: Fresh vegetables on sale in an Aldi store in London, Britain, February 15, 2018. REUTERS/Peter Summers

LONDON (Reuters) - Food retailers and suppliers could lose 9.3 billion pounds ($12.2 billion) as a result of new tariffs if Britain leaves the European Union without a deal, a study commissioned by Barclays said on Thursday.

The prospect of a “no-deal” Brexit is in sharp focus after Prime Minister Theresa May said talks with EU leaders were at an impasse last week.

The Barclays report said food and drink entering the UK from the EU would be subject to a new average tariff of 27 percent, significantly higher than the 3-4 percent levy that would be applied to non-food products.

“Some products would avoid tariffs, even in a no-deal scenario, but for most goods the effect of an increased tariff burden would be extremely damaging, and cheaper goods would be the hardest hit,” said Ian Gilmartin, Head of Retail at Barclays Corporate Banking.

In 2017, UK imported 48 billion pounds worth of food and drink, or approximately 40 percent of the total British market, economic modeling by Retail Economics for Barclays Corporate Banking showed.

But 71 percent of these imports were from the European Union and so were not subject to tariffs.

“A positive agreement on trade is essential if we are to protect UK exporters and avoid significant price rises for UK consumers,” Gilmartin said.

Among the highest levies facing the sector in a no-deal scenario, frozen beef would have a duty of nearly 300 percent, while orange juice would have a tariff of 180 percent, the report said.

Reporting by Alistair Smout; editing by Stephen Addison