Following Brexit, the British Retail Consortium has asked government negotiators to put consumers first and keep shop prices affordable once the U.K. leaves the European Union.
The BRC pledged a positive and constructive approach for next March’s negotiations in a letter to the secretary of state for international trade Liam Fox. In its submission, the BRC said that the government’s strategy must focus on decreasing import costs and avoiding tariff increases.
“We will be supporting the government through this complex and difficult process, helping them analyze how increased cost pressures on retailers could mean higher shop prices and identifying any opportunities for new trade deals that could benefit individuals and families,” BRC chairman Richard Baker said.
Baker further discussed how the retail industry is an important component of the U.K.’s economy in terms of business and financial prosperity.
“The retail industry is the U.K.’s biggest importer and has huge experience of importing from every corner of the world,” Bakers said. “We will be engaged in a constructive dialogue with government that will bring our experience to bear on the Brexit talks to the benefit of everyone in the U.K.”
Cost headwinds are a major concern for the BRC. Considering that U.K. retailers have been highly efficient in insulating consumers from rising business rates and the cost of labor, the pound’s devaluation in relation to other trading currencies is causing cost headwinds. In addition, years of deflation haven’t helped with the extra costs of import tariffs.
If a Brexit deal is not reached by 2019, this could dramatically affect retailers and consumers, because the U.K. would be forced to resort back to World Trade Organization rules. Under WTO guidelines, the new tariff rates on EU imports would be very high for consumer staples, including clothing and food.
International sourcing costs would also increase under WTO regulations. Importing women’s clothing from nations, including Bangladesh, would be 12 percent higher and dining imports, including Chilean wine, would be 14 percent higher. This contrasts with duty rates of raw materials and semi-finished products, that would be zero-rated or achieve duty rates below 10 percent.
On the upside, the U.K. could formulate its own GSP for developing nations when it departs from the European Union. This would reduce the number of imports that don’t fall under tariff preferences, which would essentially benefit British consumers and the economic development of other countries, including Kenya.
The BRC is also campaigning with other industry groups to foster U.K. retail industry employment, which currently provides jobs to approximately 200,000 EU nationals. Even though Brexit will change the U.K.’s economy, retail workers should feel secure enough to pursue their career paths regardless.
Lastly, the BRC’s third main platform will be to request that the government only introduce domestic legislation for the retail industry that will foster growth for retailers and the 3 million workers they employ. Although retailers would like to be involved in the Brexit talks, they will still have to endure a tough economy, competition and structure changes, which would limit their ability to protect consumers from such impacts.