Brexit: UK businesses ‘face an extra £1.2bn in costs if it loses access to trade deals’

Lord Peter Mandelson, the former EU Trade Commissioner, said the billion-pound bill 'would be footed by businesses and passed on to consumers with higher prices in the shops'

The UK faces individual renegotiations for each of the 54 deals signed between the bloc and countries such as South Korea, Egypt and South Africa (Getty)

A hard Brexit will cost British importers, including fishing and petroleum businesses, an extra £1.2bn a year, it has been warned.

Open Britain, which is campaigning for the UK to keep the closest possible ties with Brussels, claimed the figure would be the cost of Britain’s withdrawal from the EU’s Free Trade Agreements (FTAs) with over 50 countries, according to research conducted by the Centre for Economics and Business Research.

The UK faces individual renegotiations for each of the 54 deals signed between the bloc and countries such as South Korea, Egypt and South Africa. A hard Brexit – a term used to refer to Britain leaving the single market and customs union – will make these negotiations with third countries more difficult Open Europe warned.

Lord Mandelson, the former EU Trade Commissioner said a hard Brexit could results in a "bombshell for British businesses".

Commenting on the report by Open Britain, he said: "The billion-pound bill for losing access to trade deals with over fifty countries would be footed by businesses and passed on to consumers with higher prices in the shops."

"Leave campaigners talk about all the free trade deals we can sign outside the EU but do not appreciate the value of those we already have. The EU is a leader in global free trade and we should seek to preserve its benefits, as far as is possible."

"The best way to keep these deals in place would be to negotiate for membership of the Single Market and the Customs Union. Doing so would be a big boost for British importers and exporters."

Labour MP Chuka Umunna also backed the research, adding: "We can’t start to negotiate those trade deals until we’ve actually left the European Union, and obviously, if we remain in the customs union and in the European Single Market, will help ensure that we don’t have the downside of not having the benefit of agreements that the European Union has with non-EU states."

Without reaching the right agreement with EU by 2019, the UK could be forced to use World Trade Organisation (WTO rules).

Under WTO rules, tarrifs on food and clothing could rise sharply, with the price of meat increasing by 27 per cent and clothing and footwear up to 16 per cent.

While UK retailers have been successful in insulating consumers from the cost of rising business rates and labour, the recent devaluation of the pound in relation to other currencies is compounding economic headwinds.

Sterling has lost a fifth of its value on trade-weighted basis during the past year. This already means that any goods brought in from outside the UK will be more expensive.

Prime Minister Theresa May will tell financiers on Monday that an “agile nation like Britain” can coexist alongside large blocs and trade “according to what’s in their own best interest and those of their people.” She is expected to remain evasive about what kind of deal the UK will seek with the EU as it negotiates its departure from the bloc.