The impact of Brexit has been widely discussed, especially what will happen if the UK exits the EU next year with no deal in place. Without concrete facts from the government about what a post-Brexit world might look like much of this has been largely speculation. And the tone has been gloomy, such as an August 2018 front-page headline in The Times, which read “no deal will hike food prices by 12%.” JD Weatherspoon boss Tim Martin has taken issue with this particular topic and waded into the argument on whether life is going to cost more after Brexit.
What’s the issue?
Tim Martin – who owns 30% of the renowned pub chain Wetherspoons – has said that many of the reports in the media about an increase in food prices in restaurants post-Brexit are incorrect. His response was triggered by articles such as the piece in The Times, which quoted leading figures from the supermarket industry who said that food products from the EU could be affected by tariffs – at an average of 22%. Martin claims that a 2016 statement from British Retail Consortium Chairman Richard Baker that a no deal Brexit would mean tariffs of 12% on clothes and 27% on meat was “misleading.” He also challenged former Sainsbury’s chairman David Tyler’s interpretation of a switch to World Trade Organisation (WTO) rules, which the former supermarket boss said would mean 22% tariffs on EU imports.
According to Tim Martin, the UK government has the sole power to decide whether to impose tariffs and won’t do so because it would lose them the next election. He even claims that the UK will see a reduction in pricing post-Brexit because the UK would no longer be paying these invisible taxes to the EU. It should be noted that Martin is not exactly objective on the Brexit issue. He is a renowned Brexiteer and not only banned the sale of EU beers from Weatherspoons but also commissioned 500,000 Brexit beer mats for the chain of pubs. But is he right?
Some of what Tim Martin has highlighted is true – governments have the power to apply tariffs of their choosing to imports. The reason to impose those tariffs is often to protect domestic manufacturers and products against the competition, or for reasons of revenue raising or public health. And there is no such thing as a “WTO tariff” – the WTO does not set its own tariffs or require that its members do. However, things are also not as straightforward as Tim Martin would have us believe. In July this year the government submitted a draft new national schedules of tariffs and equivalent charges on UK imports of goods to the WTO.
This schedule needs to be approved by the WTO and before that happens WTO members – including all of Europe – have the right to comment on the schedule and to seek negotiation if they disagree with it. It’s also worth bearing in mind the reciprocal nature of imports and exports – for example, what the UK charges on imports could have a bearing on the way the EU treats our exports.
This is not a straightforward issue and attempts to simplify it can end up being misleading. Tim Martin doesn’t have any more insight than anyone else at this stage, other than assumptions made on the basis of his own political leanings, so he – like the rest of us – will have to wait and see where the tariffs fall.
Read Comtrex’s blog for the latest news within the restaurant sector.