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The sector has already announced thousands of job losses due the coronavirus pandemic as wary shoppers stay away from the high street, and the next stage of the Brexit process poses a further challenge.
Britain left the EU in January and is currently in a standstill transition period with the bloc to give the two sides time to fix a new relationship in everything from trade to security.
Last week’s round of talks was cut short, with both sides saying that, while they wanted an agreement, they had yet to overcome the gulf in positions that could see Britain leaving the transition period without a trade deal.
Four-fifths of UK food imports come from the EU and EU imports also play a major role in supply chains for fashion, homeware, and other retail sectors.
In May, the UK government published its new tariff schedule, which would apply from Jan. 1 2021 if a deal was not agreed.
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%.
Given the highly competitive nature of retail, the industry could not absorb all these increased costs, meaning the public would face higher prices, the British Retail Consortium (BRC) said.
“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 hammered by the lockdown and data shows shoppers are reluctant to enter stores even as restrictions ease.
