News | Published January 20 2020

Businesses warn of food price rises under government’s Brexit plan

Businesses say that food prices going up could be one of many outcomes of Brexit after chancellor Sajid Javid told the Financial Times that the UK will diverge from some EU rules.

Javid said that the UK will not just act as a “ruletaker” and called on businesses to “adjust” to impending changes.

The Food and Drink Federation said that divergence could see food prices increase at the end of this year, while the Confederation of British Industry said that remaining in line with existing EU rules would be more beneficial to jobs.

CBI director-general, Carolyn Fairbairn, said that alignment with EU rules would support jobs, “particularly in some of the most deprived regions of the UK”.

The automotive, food and drink and pharmaceutical industries warned the government in 2019 that diverging from EU regulations could have an adverse impact on their sectors.

In the FT interview, Javid said that the Treasury would not support manufacturers favouring alignment with EU rules, since firms had known since 2016 that the UK will be leaving the bloc despite not knowing “the exact terms”.

Javid stopped short of going into detail on which EU rules he wishes to scrap, but admitted that some businesses would benefit from Brexit more than others.

He said: "There will not be alignment, we will not be a ruletaker, we will not be in the single market and we will not be in the customs union - and we will do this by the end of the year.”

Javid’s plans also include doubling the UK’s annual economic growth to between 2.7 per cent and 2.8 per cent, with the additional headway coming from spending on skills and infrastructure in the Midlands and North of England.

Planned changes to Treasury investment rules will pave the way for more widely distributed investment, having historically favoured investing government funds into places with higher productivity and economic growth.

The 11-month transition period will begin after leaving the EU on January 31, where the UK will remain bound to most EU rules and contribute to its budget but have no representation in its institutions. During this window, the UK will seek to agree a future trading relationship with the bloc.

The Food and Drink Federation’s chief operating officer, Tim Rycroft, told BBC Radio Four that its focus would be ensuring that the government “clearly understands what the consequences will be for industries like ours if they go ahead and change our trading terms”, adding that Javid’s comments do not bode well for frictionless UK-EU trade.

Meanwhile, the Society of Motor Manufacturers and Traders said that the automotive sector was prioritising the avoidance of “expensive tariffs and other ‘behind the border’ barriers”.

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Authored by

Scott Challinor
Business Editor
January 20 2020

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