Report modelling the impact of UK crashing out of EU and reverting to WTO tariffs shows poorest families would be hardest hit
Theresa May’s working dinner with Jean-Claude Juncker on Monday night, aimed at breaking the deadlock in Brexit talks, was described as taking place “in a constructive and friendly atmosphere”. Their joint statement failed to mention what the two dined on, but the price of food in the event of a ‘no deal’ Brexit was very much on the menu in the UK on Tuesday morning.
New research claims that leaving the EU without a trade deal would result in significant price increases to household goods and other essentials, with the poorest families being hit the hardest.
The report called Changing Lanes has been jointly produced by the Resolution Foundation think tank and academics at Sussex University, and it explores the impact of the UK crashing out of the EU without a trade deal and reverting to World Trade Organisation tariffs. Its modelling suggests a no deal scenario would see the cost of dairy products rise by 8.1%, meat by 5.8% and the price of a car increasing by 5.5%.
These sharp price rises would result in the average British household’s expenditure rising by £260 a year, with over three million families facing an annual increase in their cost of living of more than £500 a year.
Low-income households would feel the impact of the increases more as they spend a greater percentage of their income on food and essential items, products that would be affected most by new trade tariffs. This proportionate spending would see the poorest 20% of households feel the effects by a third more than the richest 20% of households.
Stephen Clarke, Economic Analyst at the Resolution Foundation, said “While trade may not have been the biggest issue in the referendum it is one that will affect the day-to-day living standards of every family in Britain. The government must rightly continue to prioritise a comprehensive new trade agreement with the EU in order to avoid households having to fork out for a ‘no deal’ outcome through higher prices and squeezed households budgets.”
The research will make grim reading for Theresa May who has sought to champion the cause of the ‘just about managing’ since her first day as Prime Minister. Its publication comes on the day that UK inflation hit a five-year high and arrives hot on the heels of a row sparked by transport secretary Chris Grayling’s claims that the UK could become self-sufficient in food production post-Brexit. His comments were dismissed as “tripe” and “out of touch” by farming industry leaders.