Brexit causes rise in food import costs

Sales of salmon and whisky are holding up wellSales of salmon and whisky are holding up well
Sales of salmon and whisky are holding up well
Sterling's slump has caused Britain's food and drink trade deficit to balloon, despite salmon and whisky sales helping exports touch a record high.

The Food & Drink Federation (FDF) said the Brexit-hit pound had ramped up the price of imported ingredients and materials, causing the trade gap to grow by 16% to minus £12.4 billion for the first half of the year.

On a positive note, strong overseas demand for whisky, salmon and beer has lifted exports by 8.5 per cent to an all-time high of £10.2 billion for the period.

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While the weakness of the UK currency has forced food producers to stomach increased costs, it has also helped drive international demand by making products cheaper on overseas markets.

Ian Wright, director general of the FDF, said the low level of the pound was a concern, but the expansion in the exports of food and alcoholic drinks was encouraging.

He said: "It is great to see such strong growth in our exports to EU Member States.

"The EU remains an essential market for UK exports as well as for supplies of key ingredients and raw materials used by our industry.

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"We believe there are significant opportunities to grow our sector's exports further still.

"The continuing weakness of sterling is a concern.

"However, we hope that with the determination of businesses and the assistance of Government, we can open more channels and provide a further boost to the UK's competitiveness on the world market."

Export sales of branded food and non-alcoholic drink were leading the charge, climbing 11.3% for the first six months of the year.

The greatest export demand came from the European Union (EU), boosting its share of sales to 61.2% and outstripping the appetite from markets outside the 27-nation bloc.

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It brings into sharp focus the importance of striking a free trade agreement with the EU following Brexit, with Britain set to crash out of the single market in 2019 and Tory ministers making zero headway on a new deal.

Britain's top three export markets were Ireland, France and the United States, the report said.

Food Minister George Eustice said: "These encouraging figures show that the UK's high quality foods and high standards are sought after around the world.

"Last week we announced further market access to China for pork producers and UK beef will soon be heading to the Philippines.

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"We will continue to work with industry to open new opportunities."

Food sales remain a bright spot for UK retailers on home soil after inflation raced ahead of wage growth in response to the fall in the pound.

Retail sales came in ahead of expectations for July at 0.3%, with food sales picking up to 1.5% as all other areas, except household goods, recorded falls.

The Brexit-hit pound has also led to the demise supermarket salad provider Southern Salads, which called in the administrators on Wednesday and shed 260 jobs in response to the challenging market conditions caused by the currency.