CHANGES to food prices after Brexit will be “very modest indeed” according to the chairman of Tesco, after Boris Johnson finalised a deal with the EU.
John Allan told the BBC that “hardly be felt in terms of the prices that consumers are paying”, assuring shoppers the deal was a “good outcome”.
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John Allan said increases in food prices will be “very modest indeed” post BrexitCredit: Getty Images – Getty
Prime Minister Boris Johnson signed the trade deal on December 24th Credit: Getty – Pool
He told BBC Radio 4’s ‘The World This Weekend’ that the last minute deal was far better than no deal.
It comes after four years of Brexit debates resulted in the UK being permitted to trade freely with the EU without quotas or tariffs in the historic deal signed on Christmas Eve.
According to Allan, the main benefit was that it removes a “major distraction” from business and government as the country attempts to recover from the coronavirus crisis.
“It should enable us to address the challenges and opportunities our economy has got in a much more full-blooded way,” he said.
It is a sharp turnaround from last month, as Brits buckled up for a no deal and Allan warned that food prices could rise between 3% and 5%.
However, the deal struck with the EU means that any noticeable changes in food costs for consumers were unlikely.
The deal ensures “tariff-free” trade between the UK and the EU, Prime Minister Boris Johnson said.
Allan explained: “The tariffs were the things that were going to generate the price increases.”
“There’ll be a little bit more administration associated with importing and exporting. But in absolute terms, I think that will hardly be felt in terms of the prices the consumers are paying.”
Brits were preparing for huge price hikes if no deal was struck, with a price increase of 40% expected for some foods such as brie cheeseCredit: Getty Images – Getty
He said UK companies will be able to cope with the additional work involved in the customs regime, although some small businesses may struggle.
Some of the 70% of small businesses only trading with the EU, rather than worldwide, may be dealing with customs paperwork for the first time.
British trucking firms, supermarkets and other businesses pleaded with the government ahead of the deal to come to an arrangement, fearing tariffs resulting in price hikes.
The price of some imported foods could have risen by up to 40%, such as brie cheese.
But Brexit will now only have a “marginal effect” on your supermarket bill, according to the Tesco chairman.
He also stressed the deal “will not obstruct our ability to keep our Northern Ireland supermarkets supplied.”
“All the detail is not clear, but we were well set up, even if there was no deal, to continue to supply our NI supermarkets.
“I think that will be even easier now.”
Changes to “intra-Ireland” trade would be “marginal”, which also applies to agricultural businesses operating north and south of the border.
Despite the good news, Allan did not see any significant benefits for supermarkets after leaving the EU.
“Certainly Tesco – and I assume our competitors – we’re very keen to maintain food standards.
“We won’t be seeking food from other countries that have different and potentially lower food standards than us, so I don’t think it’s going to make any material difference,” he said.
Brexit will now only have a “marginal effect” on supermarket pricesCredit: Getty Images – Getty