Marmite was “just the tip of the iceberg”, former deputy PM Nick Clegg said today as he published a paper warning a ‘hard’ Brexit would send UK food prices soaring.
The Liberal Democrats spokesman on Europe, who has been working with experts to understand the impact of Brexit across a number of sectors, argued the only way to avoid higher food prices would be to negotiate a Norway-style agreement, which would enable the UK to remain part of the single market despite exiting the EU.
Criticising Theresa May for her “iron silence”, Clegg said leaving the single market was not mandated by the referendum, and would have consequences before Brexit even took place.
“The recent drop in the value of the pound and its impact on sales of Marmite and PG Tips is only a foretaste of what is to come in the next 12 months,” said Clegg, who warned that smaller businesses would not have the same financial stability as Unilever to battle with supermarkets over price increases.
“It represents a fundamental threat to many small businesses who are trapped between rising production costs and fixed shelf prices,” said Clegg.
The paper warned that in the case of a hard Brexit, the UK would be required to impose tariffs on imports, and the EU and the rest of the world would be “obliged” to impose tariffs on UK exports, in line with World Trade Organization regulations.
This would be a major blow for the UK’s food and drink exports, and would result in surging retail prices for imported foods such as chocolate, cheese and wine, said Clegg.
Tariffs required by the WTO for agricultural would goods average at about 22.3%, unless a free trade agreement was in place, the paper warned.
Chocolate could be one of the worst hit, with a possible 38% tariff in order to gain access to the European market. Tariffs would also be high on livestock products such as milk (47%), cheese (40%), beef (59%) and lamb (40%), as well as unmilled wheat (40%).
“Parts of the sector appear to be vulnerable to a series of shocks which will inevitably follow from a ‘hard Brexit’: workforce shortages; the loss of preferential access to key markets in Europe and further afield; tariff barriers; customs checks and worries about competitiveness arising from the loss of subsidies and tariff protections,” said Clegg. “A hard Brexit will lead us off a cliff edge.”
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