Brexit: M&S warns of tariff impact as NI supermarkets struggle with supply

M&S chief executive Steve Rowe welcomed the fact that a deal was reached between the UK and the EU on Christmas Eve. However, he said issues around rules of origin and the prospect of tariffs on moving products from the EU into the UK and on again to its businesses in Ireland and the Czech Republic would have a material impact. 

“Like all businesses, having certainty over the UK’s relationship with the EU is helpful and we will not incur tariffs on core UK sales,” he said.

“However, potential tariffs on parts of our range exported to ROI, Czech Republic and our franchise business in France, coupled with complex administrative processes, will have a significant impact on these businesses, which we are working actively to mitigate.” 

Rowe said a third of products in M&S’ food business are “subject to fairly complex rules of origin arrangements”, which incurs “a variable rate of tariff”. 

“Percy Pig is manufactured in Germany; if he comes to the UK and we send him to Ireland he would in theory have some tax”

Steve Rowe, M&S

“Any product that is manufactured in Europe that comes to the UK and is then redistributed to somewhere like ROI also potentially faces a tariff,” says Rowe. 

“The basic example is that Percy Pig is manufactured in Germany; if he comes to the UK and we then send him to Ireland he would in theory have some tax. 

“We have a lot to do in terms of composition and rerouting, but it is really important that we focus on continuing to trade the business. At the moment we are making sure we have continuity of supply in our Irish business.”

Supermarket shortages in Northern Ireland

Rowe’s update came the same day many supermarkets confirmed that new arrangements under the deal were hampering fresh food getting to Northern Ireland. 

Sainsbury’s has been stocking around 70 Spar lines on its shelves in the region since January 1, which a spokeswoman said was part of a contingency deal the retailer agreed prior to the Brexit deal being announced. 

The spokeswoman added: “A small number of our products are temporarily unavailable for our customers in Northern Ireland while border arrangements are confirmed. 

“We were prepared for this and so our customers will find a wide range of alternative products in our stores in the meantime, and we are working hard to get back to our full, usual range soon.”

It is understood that both Tesco and Asda are also facing some issues in supplying Northern Ireland stores with some products, with the closure of the border between France and the UK on December 19 adding to the backlog. 

Tesco described the situation as a “short delay” and added: “We’re working with suppliers to get these back on the shelves as quickly as possible and direct customers to alternatives where we can.”

“Some regulations were only given to retailers on December 31, which did not give any time to prepare. That meant some retailers stopped shipping parcels for a short period”

Aodhán Connolly, Northern Ireland Retail Consortium

Northern Ireland Retail Consortium director Aodhán Connolly said: “Retailers are working hard to continue to supply Northern Ireland given the changes that were brought in at the end of the transition period.

“Some of those regulations, such as for parcels, were only given to retailers and logistics firms on December 31, which did not give any time to prepare. That meant some retailers stopped shipping parcels for a short period, but the majority have now come back online.

“There has been some disruption to supply in other areas, too, while some GB suppliers get used to a new way of trading with Northern Ireland, and this was exacerbated by the days that fresh food was not able to pass from the EU to GB. But retailers are adept at quickly changing supply chains and, while there may be slightly less choice, there is plenty of stock.

“However, in the long term, we will need the UK government and the EU to work with us to find long-term workable simplifications that keep choice and affordability for NI families while keeping NI business competitive.”