Failing to secure a free trade deal after Brexit will be “disastrous” for Britain’s £28bn processed food and drinks industry and must be avoided at all costs, a committee of MPs has warned.
In a new report they claimed that without access to European Union markets after the end of the transition period, in December 2020, exports of processed foods such as chocolate, cheese, beef, pork and soft drinks would suffer while UK consumers would face higher prices and less choice on the supermarket shelves.
The stark warning comes from the Business, Energy and Industrial Strategy Committee, with MPs also saying that reversion to World Trade Organisation rules after withdrawal from the bloc would have a “seismic impact” on the country’s largest manufacturing sector.
“The sector would undeniably suffer from reverting to WTO tariffs in the event of a ‘no deal’ scenario,” the MPs’ report states.
The committee added British participation in the single market and customs union had led to an “over reliance” on EU markets, which accounted for 60 per cent of the £22bn in processed food and drinks exports in 2017.
They said during their inquiry the committee did not hear any evidence that moving away from the current customs arrangements could be beneficial to UK manufacturers or consumers.
It echoes a similar warning from Sainsbury’s chief executive Mike Coupe, who last month said the supermarket would have to increase prices if any barriers to imports were introduced after Brexit.
Rachel Reeves, the Labour MP who chairs the committee, 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.”
The report added that 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.”
The committee warned that if the 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 to allow the industry continued access to EU labour – both skilled and unskilled – on which it is heavily reliant.
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