A major European dairy products producer has corrected the UK government saying that a no-deal Brexit will lead to higher prices.
Alra, which produces items like Lurpak butter, said the environment secretary was incorrect to suggest the company could simply move part of its production to Britain in the event of a no-deal scenario.
George Eustice told the BBC on Sunday that Arla could choose to relocate some of its production chain to the UK in order to avoid costly tariffs.
He said: “In a non-negotiated outcome, what would happen is companies like Arla, which is a big Danish company, sells brands like Lurpak in the UK that are manufactured in Denmark, they would have to relocate that production to the UK.”
Ash Amirahmadi, Arla’s UK managing director, said such a move would be illegal.
“The picture around moving products into the UK is a bit more complicated than that statement,” he said.
“If you take Lurpak on its own, it is subject to legal protection which means it can only be made in Denmark.
“It can’t be produced in the UK. The secretary of state may or may not have known that.”
He wanted that tariffs on dairy products imported into Britain would most likely lead to price rises in UK supermarkets and a potential drop in availability.
“We would have to pass on the cost to our customers,” Amirahmadi told Business Insider.
“Obviously, it’s not for us to tell customers what to do. But I would be very surprised if our customers didn’t have to absorb the cost. If we are in a situation of no negotiated deal, then we are looking at increased retail inflation.”
The dairy industry is expected to be one of the hardest hit in the event of a no-deal Brexit.
Around 98% of UK dairy imports arrive from the EU, Business Insider reports. Under new government plans, these products will be hit with a 35% tariff come January 1, 2021 if no trade deal is struck before the end of the year.