British supermarkets stock food; buyers said not to accumulate

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Buyers were faced with partially empty shelves at a London supermarket on March 14, 2020 when the coronavirus outbreak resulted in storage.
JUSTIN TALLIS | AFP | Getty Images
UK grocery stores stockpile food in the face of a no-deal scenario as negotiations for a Brexit trade deal between the EU and the UK come to an end.
Supermarkets have reportedly been urged by government ministers to stock non-perishable goods, according to the Sunday Times newspaper, with lawmakers saying a “no-deal Brexit is on the cards.” A UK government spokesperson was not immediately available for comment when contacted by CNBC.

There have already been widespread warnings from business leaders about possible shortages of fresh produce, potential delays in deliveries from the mainland and price increases in the event of a no-deal scenario – where UK and EU fail to agree on post-Brexit trade deal.

The two sides have until Dec.31 to agree on a deal, and although talks continue at this late stage, they have warned that a no-deal is the most likely outcome.

There were glimmers of hope on Sunday, however, when British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen agreed to “go the extra mile” and called on their negotiators to keep talking. .

The food retail industry is watching the negotiations closely, but major chains have already taken steps to mitigate a no-deal situation.

Online grocer Ocado stocks long-lasting products such as Italian beer, according to a report last week, while the president of Tesco said his company “tries to ensure as much as possible that we stock long-lasting products. duration in our warehouses. or with our suppliers. ”

Speaking to Bloomberg, John Allan said higher food prices were “inevitable” if no deal was found and warned that food bills could rise 3% to 5% on average from January 1. Some food products, like continental cheeses, could see much larger price increases if tariffs were imposed, he said, although he urged buyers not to panic buying.

“We can see shortages of fresh foods, especially fresh foods with a short shelf life. I think it will only be for a limited period, maybe a month or two, before it gets back to normal, ”Allan said.

Dominic Raab, the UK’s Foreign Secretary, dismissed the Tesco chairman’s comments, telling the BBC last Thursday that he was not concerned about the price hikes. “Of all the things that will be a challenge, I’m not concerned about empty supermarket cupboards or the cost of food prices,” Raab said, although he admitted there would be “Obstacles in the road if we don’t get it. a free trade agreement. ”

No storage request

There are fears the uncertainty over a deal could cause consumers to panic.

In a no-deal scenario, the current duty-free trade relationship between the UK and the EU would end abruptly on December 31, and both sides would apply World Trade Organization rules by default. Both parties could then levy tariffs on each other’s imports, driving up the cost of doing business and resulting in higher prices for consumers.

The British Retail Consortium said companies were trying to prepare for a no-deal situation, while warning consumers against stockpiling goods.

“Retailers are doing everything they can to prepare for any eventuality on January 1 – increasing the stock of boxes, toilet rolls and other longer-lasting products so that there is a sufficient supply of essentials, ”said Helen Dickinson, BRC Executive Director. in a Sunday statement.

“Although no amount of preparation by retailers can completely prevent the disruption, the public does not need to buy more food than usual, as the main impact will be on imported fresh produce, such as fresh fruits and vegetables, which cannot be stored for long periods. either by retailers or by consumers, ”she said.

The BRC warned that without a deal the British public will face more than 3 billion pounds ($ 4.02 billion) in food tariffs and said retailers would have no choice but to pass on some of those extra costs on their customers who would. see higher price filter [through] in 2021. “In addition, he said that the new controls and red tape that will apply from January 1 will create an additional burden for retailers and their customers.

Like other sectors that could be seriously affected by a no-deal outcome, such as automotive manufacturing, the BRC called on the UK and the EU to “do what is necessary to agree to a zero tariff deal, otherwise it will be the public. who pay the price for this failure. ”

A likely rise in food prices and a disruption in stocks would come after an already difficult year for consumers given the coronavirus pandemic, and put additional pressure on household finances.

Lifting regional coronavirus restrictions for Christmas is also likely to increase demand for products in supermarkets. This at a time when there have been delivery issues due to blockages at one of Britain’s largest ports, Felixstowe on the east coast of England, apparently due to a backlog of containers personal protective equipment.

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