Yahoo Finance M&S warns no deal Brexit could push up food prices
Marks & Spencer (MKS.L) has warned that the failure to get a trading deal with the European Union could lead to higher food prices at the tills in the UK.
“If no Free Trade Agreement is signed with the EU there will be further costs for all food retailers in the UK, which will likely affect retail pricing,” M&S said in its half-year results, published on Wednesday.
The retailer didn’t specify how much prices might increase by or what products could be affected.
Costs will rise with or without a deal, as a result of the increase in paperwork needed to transport food between the UK and EU, as well as between Great Britain and Northern Ireland. Food products moving along these corridors will need customs and safety certificates post-Brexit, while haulers moving the goods must have safety declarations and other paperwork to allow them across the borders.
“The increased administration will result in additional costs for both our Food and International businesses,” Marks & Spencer said on Wednesday.
READ MORE: Marks & Spencer falls to its first loss in almost 100 years
Brexit preparations are “well advanced,” M&S said, and cover a possible no deal Brexit. Much of the preparation work is going towards setting up systems to handle the increased paperwork.
The UK and EU remain locked in negotiations around a potential post-Brexit free trade deal, with less than two months to go until the transition period ends on 1 January 2021.
While a deal is still possible, the tight timelines has led to recent warnings from businesses about the potential impact of a no deal outcome. ASOS (ASC.L) said falling back onto World Trade Organisation terms with the EU would cost it £25m, while clothing giant Next (NXT.L) has said no deal would increase its costs by £13m.
M&S said the impact of no deal on its clothing business would be “much less than on food” and said it had “taken steps to mitigate any tariffs.”
The Brexit update came as Marks & Spencer reported a historic half-year loss as a result of the COVID-19 pandemic.
Watch: What is a no-deal Brexit and what are the potential consequences?
