How the Government’s no-deal Brexit plans affect retailers

The Government has released the first 25 papers detailing how exiting the EU without a deal would impact the UK.

The research covers areas such as VAT, nuclear research, farming, imports, banking and education, and approximately 55 more papers will be released in the coming months.

Announcing the first batch of no deal papers, Brexit secretary Dominic Raab said: “This is not what we want. And it’s not what we expect. But, we must be ready.”

Downplaying fears of how a no-deal Brexit would impact consumers, Raab joked that the army would not be distributing food, and pledged to protect sandwiches. You will still be able to enjoy a BLT after Brexit,” he stated.

The releases show a no-deal exit from the EU would have wide-ranging impacts on retailers due to changes in legislation.

Food supplies

One of the largest areas is food imports, with the no-deal advice and terms putting additional costs and delays on importers. The guidance states: “Firms may also need to pay out for new software or hire a customs broker, freight forwarder or logistics provider.” It also advised businesses to consider acquiring extra warehouse space to store imports awaiting customs approval.

However, Keith David Robinson, director of wholesaler comparison site CompareTheWholesaler.com said: “It seems the Brussel Bureaucrats and our lily-livered UK leaders are conspiring to make things difficult for great British (and likewise, great European) food and drink brands… We have nothing to fear from a no-deal deal Brexit. There will be challenges and hurdles but there will also be food on the shelves and planes in the air!”

Retail taxes and tariffs

Despite a no-deal exit giving the UK the ability to alter its VAT rates on items including groceries to below 15%, the new documents show little appetite for major change from the current 20% rate. “The Government’s aim will be to keep VAT procedures as close as possible to what they are now,” says the report.

The FWD also warned that a no deal Brexit could lead to other cost increases on food, drink and tobacco. It stated: “If a free trade agreement is not reached then the food and drink wholesale distribution sector will face further upward pressure on their suppliers’ prices.”

Staffing

Worker’s rights will also remain untouched, with new legislation to be brought in to mirror existing EU laws in the event of a no deal Brexit. This was supported by the NFRN who told Retail Express: We welcome the Government’s intention to keep the arrangements as close to where they are currently in order to provide reassurance to businesses.”

However, the document also boasts that a no deal would allow the government to restrict immigration from inside the EU, potentially impacting a store owner’s ability to recruit shop staff.

Product labels

Another area impacted would be product labelling. While the Government has chosen to accept EU food standards in order to simplify the border process, some differences would remain. This includes the labelling of organic goods, with UK products banned from using the EU’s symbols – forcing the UK to make its own version.

With tobacco, the UK’s existing legislation would be amended to work without the current EU laws, but would continue with little changes apart from the health warning images which would have to be changed as the EU owns the copyright for them. The Government added that a no deal would allow it to  respond quicker to: “Emerging threats, changing safety and quality standards, and technological advances.” It added that there will be a consultation with those potentially affected in September in order to come up with the regulatory amendments.

Competition

The UK would also continue with the EU’s ban on helping major companies financially either through grants or tax discounts. This means supermarkets will remain excluded from business rates reliefs received by independent shop owners.

Irish border

Despite being mentioned as an issue in nearly every paper released today, it provides little clarity as to how it would affect retailers or anyone else located in Northern or Southern Ireland. The Government said it would release more information at a later point.

Eugene Diamond, owner of Diamonds Newsagent in Ballymena, Northern Ireland commented: “This government statement justifies all the worries people had about the cost of living in N Ireland.”

Read more: "Our biggest worry is the unknown. We have also put discussions about expanding our store on hold until we feel comfortable with what’s going to happen"