Boris Johnson hints at cutting food tariffs to help reduce costs

Bloomberg

Boris Johnson took aim at his own government’s tariffs on imports of food that is not produced domestically, saying their removal could ease the UK’s cost-of-living crisis. But even his officials say otherwise.
“Why do we have a tariff of 93 pence a kilo on Turkish olive oil?” Johnson said at a speech in Blackpool, northern England, days after surviving a confidence vote in his ruling Conservative Party. “Why do we have a tariff on bananas?”
Britain’s existing tariff on Turkish olive oil is a feature of the UK-Turkey free trade agreement signed by Johnson in December 2020, a roll-over deal from when Britain left the European Union. The UK has since said it wants to renegotiate the agreement to expand its scope.
Yet Johnson’s own government has said cutting tariffs on food imports would have minimal impact on household finances. It’s a “tiny, tiny proportion, 0.4% on the cost of living,” Trade Secretary Anne-Marie Trevelyan said in April.
In his speech, Johnson said he wants to strike a balance between protecting local farmers from cut-price and substandard food made overseas, while also helping consumers. Meanwhile, UK mortgage borrowers are more vulnerable to inflation and rising interest rates than those in other European nations.
Residential mortgages are in the firing line from inflation and interest rates because rate hikes used to combat surging prices increase borrowers’ costs. Inflation is likely to peak in 2022, but commodity price shocks driven by Russia’s invasion of Ukraine could amplify pressures and uncertainty, Moody’s said.

That’s according to research by Moody’s Investors Service Ltd, which says almost 13% of British borrowers could face financial distress if the UK sees high-single-digit inflation next year, alongside an aggressive rise in interest rates.
In contrast, the impact of rising rates on European nations such as Spain, Italy and France will be softer given their high share of long-term, fixed-rate loans. In these nations, a large share of floating interest rate loans have been gradually written off, having originated from periods of historically high interest.
Since then, mortgage borrowers in Spain and Italy have largely moved away from floating loans due to low interest rates, helping to shield portfolios from rising costs. In the UK, the spectrum of borrowers is broader, meaning they are more vulnerable to inflationary pressures.
Residential mortgages are in the firing line from inflation and interest rates because rate hikes used to combat surging prices increase borrowers’ costs. Inflation is likely to peak in 2022, but commodity price shocks driven by Russia’s invasion of Ukraine could amplify pressures and uncertainty, Moody’s said.