Potential Impact of Brexit on Fruits and Vegetables Purchases in Scotland

At the start of 2021, the economics observatory suggested that the British pound was 15 per cent weaker relative to the Euro than it was on the eve of the Brexit referendum. The goal of the present study is to assess the implications of an unfavourable Brexit deal that has the potential to depreciate the British pound by making fruits and vegetables imported from the EU relatively more expensive than the pre-Brexit era in Scotland. Demand for fourteen kinds of fruits and vegetables purchased in Scotland was estimated using monthly time series data constructed from a consumer panel collated by Kantar Worldpanel from 2006 to 2020. Using short-run elasticities calculated from the demand model we simulated the implications of a 10 per cent price increase for fruit and vegetable resulting from changes to trade tariffs with the EU or movements in exchange rates. The results tend to suggest that a major share of the vegetables purchased in leading retail shops in Scotland are either produced in the UK or the rest of the world. For fruits, a major share of fruits especially tropical fruits and grapes bought are sourced from the rest of the world. The depreciation of the British pound relative to the Euro has negative implications for demand for all kinds of fruits and vegetables. The impact of the price increases is highest for fruits and vegetables of the EU origin. This could result in as high as 63 per cent reduction in net total purchases for seed vegetables and as low as 2 per cent reduction in purchases for edible plant stem vegetables. The fall in purchases could potentially affect Scottish government’s goal to increase fruits and vegetable consumption by 400 grams per person per day.