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Thursday 18 October 2018

No deal on Brexit will be disastrous for UK food industry, MPs warn

Commons Business Committee warns exports will be hit and prices will rise if Britain reverts to WTO rules.

The committee warned of the impact of no deal on the processed foods industry (Dominic Lipinski/PA)
The committee warned of the impact of no deal on the processed foods industry (Dominic Lipinski/PA)

Gavin Cordon

Failure to secure a free trade deal with the European Union will be “disastrous” for Britain’s £28 billion processed food and drinks industry, MPs have warned.

The cross-party Commons Business, Energy and Industrial Strategy Committee said a reversion to World Trade Organisation (WTO) rules would have a “seismic impact” on the country’s largest manufacturing sector.

It warned that without full access to EU markets, exports of processed products such as chocolate, cheese, beef, pork and soft drinks would suffer while consumers in the UK would face higher prices and less choice on the supermarket shelves.

The committee said British participation in the single market and customs union had led to an “over reliance” on EU markets which accounted for 60% of the £22 billion in processed food and drinks exports in 2017.

A no deal scenario would be unviable and unacceptable to the sector as, at least in the short term, the EU is the UK’s main trading partner Business, Energy and Industrial Strategy Committee

It said the industry, which employs 400,000 people – a third of them EU nationals – would “undeniably suffer” if Britain left without a trade deal and was forced to fall back on WTO rules.

“The EU’s most favoured nation tariffs under WTO rules would be disastrous for UK exports and must be avoided at all cost,” the committee said.

“A no deal scenario would be unviable and unacceptable to the sector as, at least in the short term, the EU is the UK’s main trading partner. It would also have serious repercussions for importers of UK products in the EU and the rest of the world.”

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The committee warned that if UK tried to lower or remove tariffs on imports after Brexit, the consequences for British farming could be “extremely serious” while the impact on prices in the shops was likely to be “very limited”.

It said that Britain should remain “as close as possible” to EU regulations warning that UK consumers “would not tolerate any lowering of standards”.

It also urged the Government to seek a deal on immigration which allowed the industry continued access to EU labour – both skilled and unskilled – on which it was heavily reliant.

The committee chairman Rachel Reeves said: “The success of the industry has been highly dependent on participating in the single market and customs union.

“To ensure the continued success of our food and drinks industry, the Government must provide clarity and certainty on our future relationship with the EU and seek continued regulatory, standards, and trading alignment with the EU in the processed food and drink sector.”

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