UK food prices are set to rise by as much as 8% following Brexit regardless of any trade deal negotiated with the EU.
Products including flowers, olive oil, tomatoes, peppers and pears are among those whose prices would increase since they cannot be produced in the UK and imports are almost exclusively from the EU, according to a new Rabobank analysis.
It explained that once outside of the free trade area, the UK will be forced to impose extra border controls, making importing such goods from the EU more expensive.
Although current political focus is on future trade with the EU and the prospect of more protectionist import tariffs to protect UK farmers, Rabobank senior analyst Harry Smit argued that a scenario which would see Britain remove all import tariffs for food products is more likely than many assume.
This route, which Smit describes as “the New Zealand model”, would expose EU food and agriculture exporters to competition from the rest of the world, possibly keeping UK food prices in check but potentially reducing sales from some European food economies.
“This would be consistent with the UK’s historically pro-free trade approach and indicative of politicians’ keenness to keep food prices in check. But it could be bad news for the EU, which has previously had preferential access to British buyers via the single market,” said Smit.
In any event, Smith said UK consumers should brace themselves for price hikes of as much of 8% on certain products. “Unfortunately, whatever the outcome of Brexit negotiations, they are going to have to get used to higher prices on olive oil and many fresh fruit and flowers.”