UK consumers could bear the brunt of price increases if the UK government does not achieve a tariff-free Brexit deal, according to the British Retail Consortium (BRC) in a statement released on Wednesday.
The group, which is the trade body for UK retailers, has been vocal throughout negotiations.
“Retailers strive to provide the best value, quality goods, but their ability to do so, come 2021, is under threat,” said Helen Dickinson OBE, chief executive of the BRC.
“Without a zero-tariff deal with the EU, supermarkets will be subjected to £3.1bn ($3.9bn) a year of tariffs on food and drink, which they will have little choice but to pass on to their customers as retail margins are so thin. Many non-food retailers will also face large tariff bills, and as a result, the total cost to the industry and its customers would be much higher.”
Fresh Brexit talks began on Tuesday with a more conciliatory tone as European negotiators have reportedly dropped their demand for the two sides to reach a broad agreement on all previously disputed outstanding areas.
In return, the UK is expected to “engage in detailed discussions on post-Brexit fishing quotas and the government’s future subsidy policy, two of the biggest remaining sticking points,” according to The Times.
A surge in coronavirus cases has been putting more pressure on UK and EU politicians to find an agreement that would not cause further economic disruption to all parties.
Falling shop prices — including non-food ranges such as clothing and footwear — have been driven by lower inflation and allowed retailers to keep prices low, said the BRC.
Non-food prices fell by 3.2% in September compared to a decline of 3.4% in August, according to the BRC. This is below the 12-month average price decline of 2.6%, but above the 6-month average price decline of 3.5%.
Yet, without a zero-tariff deal, the group says this would end.
“The recessionary impact of the pandemic on retailing will become more visible during the ‘golden quarter’ and retailers are already adapting their business models,” said Mike Watkins, head of Retailer and Business Insight at Nielsen.