Morrisons warns of higher supermarket prices if no Brexit deal

Speaking to The Guardian, chief executive of Morrisons, David Potts, said,

“From our point of view representing British consumers we would like the government and the leaders of the country to negotiate a deal that includes no tariffs UK to Europe or Europe to the UK because tariffs do drive inflation. The warning follows Prime Minister Boris Johnson’s suggestion this week that he might be ready to tear up his own Brexit withdrawal agreement.

Morrisons, which has its own food processing and packaging plants and has direct relationships with farmers, states that although the firm is in a good position to weather the Brexit storm, as two-thirds of its products are of British origin, perishable items such as fruit and vegetables cannot be stockpiled.

The major supermarkets expect a difficult Christmas in the light of rising unemployment and economic difficulties caused by the Covid-19 pandemic. While sales at Morrisons’ stores rose by 11.1%, profits sank by a quarter to £148m in the six months to 2 August, as the supermarket was forced to keep prices low amid heavy competition while costs rose during the pandemic. Morrisons spent an additional £155 million, including £47 million in extra pay, as it hired 45,000 more staff to cope with the shift to shopping online and to cover for staff self-isolating or off sick at the height of the pandemic. A staff bonus, protective kit, and the need for more vehicles to make deliveries also added to costs, which were only partly offset by a £93m boost from the business rates holiday.

Morrisons’ profits were also hit by the shift to less-profitable online sales as it doubled orders via its website and increased capacity for home delivery fivefold via a range of services including Amazon and a new box scheme. The supermarket chain is also piloting a “dark kitchen” at its central Manchester store, from which takeaway food will be delivered by courier firm Deliveroo, with plans for two more such kitchens in the coming months.

Morrisons’ share of the online grocery market is now above 10%, up from around 6% earlier this year, although growth is slowing down from where it was at the height of the pandemic.