Axing tariffs after Brexit to have 'small' impact in pushing down prices, says IFS
2 min read
Scrapping tariffs after Brexit would have a small impact on lowering the price of goods even based on “optimistic” assumptions, the IFS has said.
The body said cutting trade tariffs completely upon leaving the EU would reduce prices in British shops by between 0.7% and 1.2% at best, with the latter likely to be an “overestimate”.
They also point out that consumers had already seen prices rise by 2% since the referendum due to the weaker pound.
The thinktank calculate that costs attached to new EU trade barriers may hit consumers and "offset" any "rather limited" gains from ditching customs union rules.
Furthermore they say that such a move could offer positive economic benefits in the long run, but that it could be “very damaging” for some UK industries initially.
The thinktank also pointed out that European charges on goods consumed in the UK were “not particularly high” anyway – at 4.6% on imports from countries without an EU trade deal.
The report says that average tariffs applied to UK imports as part of the customs union are at around 2.8%.
Director of the IFS, Paul Johnson, told the BBC: "If we leave the customs union, we can come to our own trade deals with other countries, we can reduce tariffs.
"But even if we reduce that as much as possible, the effect on prices will be really quite small relative to what is still a big cost of leaving the customs union because it would make trade with the rest of Europe so much more expensive."
PoliticsHome Newsletters
PoliticsHome provides the most comprehensive coverage of UK politics anywhere on the web, offering high quality original reporting and analysis: Subscribe
