Tesco warns of higher prices if UK and EU fail to agree Brexit deal

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Shoppers face temporary shortages of some fresh foods and higher prices if the UK fails to strike a Brexit deal with the EU, the chairman of Tesco has warned. John Allan said a no-deal Brexit would trigger tariffs, “which can be quite substantial on some food items”.

“Those almost inevitably are going to lead to higher prices and I think if we go out on no-deal basis that is unavoidable,” Allan told Bloomberg TV.

The chairman of Britain’s biggest supermarket warned that the end of the transition period could trigger temporary disruption of food imports and lead to gaps on supermarket shelves, although he urged shoppers not to panic-buy.

“We may see some shortages of fresh foods, particularly short-life fresh foods. I think that will only be for a limited period, perhaps a month or two, before we get back to normal,” Allan said.

“I don’t think there is any reason at all for any consumer to panic or panic buy at the moment. There is still going to be plenty of food in the UK – there may just be slightly restricted choice for a period of time.”

Tesco, along with its competitors, has been preparing for a possible no-deal scenario by stockpiling longlife products in its warehouses and with its suppliers.

Allan said Tesco had been working to “minimise the risk of food being caught in what is probably going to be the most difficult place, which is the port of Dover and alongside” and had been diverting some of its shipments to other UK ports.

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However, this comes at a time when British ports have become congested and are struggling to cope with the simultaneous pressures of arrivals of Christmas goods, Brexit stockpiling, and coronavirus restrictions.

Price increases faced by British shoppers in the event of a no-deal Brexit would be determined by how much imported food they put in their baskets, Allan said, estimating an average cost increase of 3%-5%.

“Some of the tariffs on imported dairy products, French cheeses for instance, can be as high as 40%-plus. If you eat a lot of UK-produced food, it will have less impact,” he said.

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Whether deal or no deal, a concession from the EU would allow Tesco and other supermarkets with a presence in Northern Ireland to continue supplying shops in the province without special Brexit checks.

Sainsbury’s, Marks & Spencer, Asda and other trusted traders in the food sector would be given a grace period before the checks were required, meaning sausages, burgers and cheeses would not need to examined individually at ports.

Sainsbury’s recently raised concerns that it would have to curb meat, dairy and fish supplies to Northern Ireland because of the Brexit checks.