British government plans to require all meat and dairy products sold in the UK to be labelled “Not for EU” consumption will raise food costs, hit exports and deter investment in domestic food manufacturing, a leading industry group has warned.
In a letter to ministers, the Food and Drink Federation said the post-Brexit labelling regime will cost “hundreds of millions of pounds” and had already caused international investors to “pause” plans to put capital into the UK.
“It [the labelling plan] will lead to higher prices amid a cost of living crisis and to lower investment at a time when investment in our sector is already down,” FDF chief executive Karen Betts told Cabinet Office minister Steve Baker in a letter sent on Monday and seen by the Financial Times.
The government’s introduction of “Not for EU” labels from October is a consequence of the Windsor framework deal, which sets out post-Brexit trade arrangements for Northern Ireland.
The labels are intended to guarantee that products sold in Northern Ireland that have not undergone full EU border checks do not cross into the Republic of Ireland, which is part of the EU’s single market.
As part of supplementary assurances signed last January, the UK government said it would pass legislation expanding the scheme UK-wide to “ensure no incentive arises” for businesses to avoid sending goods to Northern Ireland.
The government has consistently argued that the measures are essential to protect Northern Ireland’s place in the UK internal market as part of their overall efforts to reassure the region’s Unionist community, even if that means putting some extra cost on to business.
“These measures will help ensure that consumers in Northern Ireland have access to the same goods as those in the rest of the United Kingdom, safeguarding the UK internal market and the operation of the Windsor framework,” it said in a statement.
But the FDF argues that the labels should only be used for products in Northern Ireland, warning that a UK-wide approach would hurt small and medium-sized businesses that cannot afford to run separate production lines for EU and UK markets.
The government launched a consultation on the implementation of the scheme last month alongside a £50mn “transition fund” to assist businesses. It is considering an exemption for small businesses that have less capacity to adapt to the changes.
The FDF also warned that exports to the Republic of Ireland, a key destination for British-made food, would be “particularly badly impacted”. It added that some larger companies were “considering abandoning their exports to Ireland altogether”.
The industry also raised concerns that the labels, which are stamped on packaging beneath the barcode, will put off customers. A Survation poll for Best for Britain, the pro-EU pressure group, found that almost one in five consumers said they were less likely to buy products labelled “Not for EU”.
Betts said the labelling regime was already deterring international producers from investing in the UK’s food and drink industry because of the additional bureaucracy needed to serve a smaller market than the EU.
“We hear of investors already putting plans on pause, and considering investing in companies in the EU instead, from where they can decide about whether it’s worth supplying the UK market at all,” she wrote.
The FDF said that investment in UK food manufacturing fell by a third last year compared with 2019, the year before the post-Brexit EU-UK trade deal came into force, citing data from the Office for National Statistics.
