U.K. Consumers Face Higher Prices for EU Goods, Deal or Not

U.K. consumers will face higher prices on goods coming from the European Union after Brexit, whether Boris Johnson signs a free trade agreement with the bloc or not, according to a major business group.

Products imported from the EU after Jan. 1 2021 will require customs declarations, which cost between 16 pounds ($21) and 56 pounds per product line. They will also need documents like rules of origin paperwork, new red tape that is automatically triggered by Britain leaving the bloc’s single market and customs union.

“These things will have to happen regardless of how good the deal is,” said William Bain, policy adviser at the British Retail Consortium, which represents 5,000 businesses making 180 billion pounds of retail sales. “Any increase in cost in a low margin industry is ultimately going to be faced by the consumer.”

Looming higher costs for companies dealing with the EU, which is Britain’s largest trading partner and a source of half its imports, is a result of Prime Minister Johnson’s approach to trade talks with the bloc. Johnson is seeking a more distant economic relationship with the EU—akin to the bloc’s deal with Canada—so that the U.K. does not have to align with EU rules and can independently sign trade agreements with other countries.

Costs and delays for businesses will rise further if the U.K. and EU fail to be pragmatic on other customs processes, the BRC said. The most burdensome will be export health certificates (EHC), a form required to move products of animal origin into the EU, which cost about 100 pounds each and must be issued by a vet or other qualified professional. Such products include meats, fish, cheeses and yogurts.

Switzerland has been able to remove the need for EHCs with the EU through a deal based on regulatory alignment, but Johnson has said the U.K. wants regulatory autonomy. Last week, cabinet office minister Michael Gove told businesses to prepare for animal health checks after Brexit.

“That’s going to be a significant bit of extra red tape,” Bain said, noting a recent example of a goods truck heading to Northern Ireland which was carrying 1,392 different product lines, 800 of which would’ve required EHCs after Brexit. “It’s a significant amount of money per truck,” he said.

Another major concern for retailers is tariffs. Commerce between the U.K. and the EU will default to World Trade Organization terms if no accord is struck in 2020, and Britain is currently consulting on the levies it would apply. The EU has said a zero-tariff, zero-quota trade deal with Britain is conditional on a satisfactory agreement on fishing rights and the U.K. respecting the bloc’s rules in areas like environmental protection, labor standards and state aid. Johnson has so far rejected the idea of being bound by the EU’s so-called ‘level playing field’ requirements.

“Prices of goods are a commercial decision for businesses and depend on a variety of factors, but it’s in their interests too to make them competitive and affordable,” a government spokesperson said. “Leaving the EU’s single market and customs union gives us the opportunity to strike trade deals around the world, widen choices available for consumers, and set our own independent tariff strategy that is best for U.K. businesses and consumers.’’