Millions of Britons are concerned about the sudden rise in the food prices which emerged soon after Brexit. People are still not sure why or how this happened and what relation UK’s exit from the European Union might have with the grocery prices.
Let’s have a look at how this works.
Pound sterling has sunk to its lowest after Brexit
Soon after the referendum on June 23rd, the pound tumbled by an alarming ten per cent. In July 2016, the sterling was set to slide another six per cent, according to a Reuter’s poll. The currency had not been seen falling to this level since about three decades. While there is no definitive data, recent surveys suggest that Britain’s economy is shrinking with speed since the 2008-09 crises.
Dependency on imports has increased
Before the vote, the National Farmers Union (NFU) warned the ones in favour of Brexit about UK’s dependency on imports, which when combined with the plunging pound will cause the food prices to shoot. NFU’s president, Meurig Raymond, pointed that the referendum was the result of a “political car crash.”
UK farmers were not in favour of the exit. They didn’t take part in the referendum, saying that the EU membership was in the best of their interests. The farmers received up to 3 billion pounds per year in support payments from the EU. These subsidies made up about 55 percent of the total income from farming, according to government figures.
After the exit, the UK export industry is suffering
Recent price comparisons show the cost of some groceries like pasta and onions to have been up to 10% more expensive in July. An astounding 60 per cent of British food exports were being sold to the EU, and without these sales, the commerce and economy will suffer.
On the other hand, because of lower import tariffs, the UK farmers would now get a 15% decrease in the prices of beef and lamb. This isn’t good since 38% of the lamb produced in the UK goes to the EU. The prices for poultry, cheese and dairy products will also face a fall.
It was revealed that the average income of a farmer in United Kingdom was over £20,000 in 2014, and around 55 percent of that consisted of EU money.
UK produces only 60% of the food they consume locally
In the aftermath of this, Mr. Raymond told the Guardian, “Sadly, we only produce 60% of the food we consume. We’ve seen our self-sufficiency fall dramatically, so we are very dependent on imported food. So a weaker pound will mean higher imported food value.”
Prices mounting in order to keep the farms running
Minette Batters, deputy president of the NFU, admitted to Mail Online, “Prices will have to go up to ensure farms stay in profit,”
Seeing the situation, Brexiters promised that the government will make up for the subsidies, but the truth is that there has been no news about the new schemes. So far, there is nothing that could be done and ultimately, UK consumers will have to make up the shortfall in income for farmers by paying higher prices.