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WSTA calls for temporary suspension on wine tariffs to prevent prices rocketing in the event of a No Deal Brexit

Brexit | 23 January, 2019

The Wine and Spirit Trade Association is calling for clarity from Government on its post no deal tariff plans, warning that any no deal Brexit will see wine prices hit an all-time high.

In the event of a no-deal Brexit the WSTA believes that a temporary suspension on all wine tariffs for 6-12 months would massively reduce the strain on the supply chain that a no deal Brexit will inevitably bring about. It argues that there would be minimal impact to Treasury coffers and probably cost much less than having to introduce a system for collection of tariffs on products that currently enter the UK tariff free.

Currently an average priced bottle of still wine costs £5.73. If the UK crashes out of the EU without a deal tariffs on EU wines alongside a planned duty increase on 1 February would add an extra 20p to the price of a bottle.

In the absence of any certainty from Government and in a bid to try and keep shelves stocked and wine prices down wine importers across the country having to stockpile wine.

Direct Wines are bringing in an additional 2 million bottles, about a 40% increase, on their usual stock. And Bibendum PLB (as part of C&C) say they have developed a “robust Brexit plan” which will see them ordering “significant” extra wine to have ready in stock. Majestic Wine reported last year that they will hold another 1.5 million more bottles of European wine as part of emergency planning.

The WSTA has been advising members for over a year that they should increase their stock by 20% as a starting point in case of a no deal Brexit.

Miles Beale Chief Executive of the Wine and Spirit Trade Association said:

“Since the Referendum, the WSTA has campaigned consistently for a deal with the EU that delivers frictionless trade in goods, with no additional tariffs or costs.

“If the UK ends up with a no-deal Brexit then wine businesses will have to cope with additional tariffs as well as another duty rise – which is highly likely to end up full square in the consumer’s lap, bumping up wine prices to an all-time high.

“We are calling on government to clarify their tariff plans now and – in the event of a no deal Brexit – to commit temporarily to imposing no tariffs on wines for at least 6 months. This would be a pragmatic solution with any loses to the Treasury covered by not having to implement a costly new system. It also leaves intact government’s ability to remove tariffs on wine permanently – but as part of a future free trade deal.”

Currently there are no tariffs on wines from the EU, Chile and South Africa. A no deal Brexit would result in the introduction of tariffs estimated to cost UK wine importing businesses over £100 million a year.

The introduction of no deal Brexit tariffs would be a double blow for wine businesses after the Chancellor elected to single wine for a duty rise at the Autumn Budget. From February 1st duty on a bottle of wine will go up 7p. Add a tariff to the duty rise and VAT this means an average priced bottle of wine, which today costs £5.73, will cost £5.93 in the event of no deal. An extra 53p a bottle more than consumers paid before the referendum result when an average priced bottle of wine was £5.40.

For sparkling wine, which is taxed at an even higher rate, an average priced bottle currently costing £7.14 will go up 37p to £7.51.

The WSTA warns that a no deal Brexit would also mean the loss of access to the EU’s Excise Movement Control System (EMCS) which tracks alcohol coming in and going out of the country documenting consignments electronically.

EMCS allows alcohol to and from the EU to be moved on with no extra checks, without it ports are likely to descend into chaos.

The WSTA last year launched its #NoToNoDeal Campaign, which sets out exactly why passing a deal with the EU is so crucial to the prospects of the UK’s world leading wine and spirit industry.

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