Post-Brexit trade barriers increase price of food imported from EU – report

 

Post-Brexit trade barriers increase price of food imported from EU – report

 

Thinktank finds ‘clear and robust impact’ of Brexit on rising food prices, adding to cost of living crisis

UK food prices increased by 6% between December 2019 and September 2021 due to trade barriers, according to UKICE.

 

Richard Partington Economics correspondent

@RJPartington

Wed 27 Apr 2022 06.00 BST

https://www.theguardian.com/politics/2022/apr/27/post-brexit-trade-barriers-increase-price-of-food-imported-from-eu-report

 

Brexit has pushed up the price of food imported from the EU, compounding Britain’s unfolding cost of living crisis, according to a report.

 

The thinktank UK in a Changing Europe (UKICE) said trade barriers introduced after leaving the EU had led to a 6% increase in UK food prices between December 2019 and September 2021, adding to the rising financial pressure for households.

 

The report found products with a higher EU import share, such as fresh pork, tomatoes and jams, were worse-affected than items where UK imports were more commonly sourced from the rest of the world, such as tuna and exotic fruits like pineapple.

 

Households across the UK are on track to suffer the worst living standards squeeze since the 1950s amid soaring inflation driven by the rising price of energy, food and fuel. Annual inflation reached 7% in March, the highest rate since 1992. Economists have warned that inflation, which acts as a gauge for the rising cost of living, could hit 10% this year amid rising prices for gas and electricity triggered by the war in Ukraine.

 

The report, produced by researchers from the London School of Economics’ Centre for Economic Performance with funding from UKICE, found that a “clear and robust impact of Brexit-induced trade frictions” had led to the increase in prices.

 

It said Covid-19 could be ruled out as an influencing factor because there was a correlation between price increases and the share of EU imports for a particular product. Analysing trade figures compiled by the UN and price data from the Office for National Statistics, it found the two most notable increases coincided with Boris Johnson’s 2019 election victory, when a “hard Brexit” became more likely, and the implementation of the post-Brexit trade deal in January 2021.

 

Figures from the ONS show that consumer food prices fell over the period analysed by the academics. Prices have risen sharply in recent months as the cost of living spirals upwards. The analysts said this suggested that in absence of Brexit food prices could have further fallen.

 

The UK has repeatedly delayed import checks on goods arriving from the EU as ministers sought to minimise disruption. The prime minister hinted last week that physical Brexit border checks on food imports from the EU due to be introduced in July would be delayed for the fourth time amid fears that supplies could be affected.

 

Other economists say it is difficult to disentangle the effects of Brexit from other factors such as the Covid-19 pandemic, Russia’s war in Ukraine, movements in financial markets, global trade bottlenecks and shortages of workers and supplies across advanced economies. Official forecasts suggest fuel and utility bills will account for nearly half of this year’s rise in inflation.

 

Although the government has emphasised this point, pro-Brexit ministers had previously said that leaving the EU would bring down food costs by opening up the British market to exporters from around the world. Government sources said that agricultural commodity prices were linked to global gas costs. “To blame Brexit is simply wrong,” they added.

 

Figures from the accountancy firm UHY Hacker Young show that UK businesses and consumers paid £4.8bn in customs duties on imported goods last year, a new record, and up from £2.9bn a year earlier.

 

Sean Glancy, a partner at the accountancy firm, said that some of the rise will have been due to a post-pandemic recovery in trade but that most of it was probably due to leaving the EU. “Brexit related customs duty increases could not come at a worse time for British businesses and consumers. Inflationary pressures caused by Covid and the war in Ukraine are being exacerbated by those extra import duties,” he said.

 

Jonathan Portes, a senior research fellow at UKICE, said: “While Brexit is not the main driver of rising inflation or the cost of living crisis, this report provides clear evidence that it has led to a substantial increase in food prices, which will hit the poorest families hardest.”

 

A government spokesperson said: “Food prices fluctuate in any given year and depend on a range of factors including exchange rates and commodity prices. The sustained increase in global gas prices has led to increased input costs for the dairy and egg industries, including feed and fuel costs.”