The risk of higher costs from new tariffs is greatest for food and drink from the EU. Firstly, the exposure of the UK market to imports from the EU is the highest compared with any other retail sector, with more than 70% of UK food and drink imports originating from within the EU.
Secondly, the standard rate of tariffs that would apply to imports of EU food and drink is far higher than the rate for non-food goods, with duties for some meat and dairy products rising to 80%.
Thirdly, to continue tariff-free trade in food and drink post-Brexit, the EU is likely to demand compliance with a wide range of non-trade regulations which may be difficult for the UK to accept.
Fourthly, potential alternative non-EU sources of food and drink are limited by either high tariffs and/or non-tariff barriers.
Finally, any new immigration system for EU citizens would need provision for non-graduate labour to ensure that the UK retail industry has access to the workers it needs or we could see a rise in labour costs due to competition within the industry and its supply chain.
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