Poorest households will be hardest hit by 'no-deal' Brexit, new analysis says
Tumbling out of the EU without a trade deal will see household bills shoot up by £500 a year for millions of families and the poorest hit the hardest, a new report has said.
New goods tariffs will cause prices for dairy products to rocket by 8.1% while the cost of meat will soar by 5.8% and transport vehicles by 5.5%, according to trade experts.
Theresa May has confirmed that Britain is making preparations for a ‘no deal’ Brexit scenario in March 2019, but has insisted her priority is to strike a good trade deal with the EU.
If it quits without a deal the UK would fall back on World Trade Organisation rules – with pro-Brexit figures insisting the UK would not be harmed.
But in a new report, the independent Resolution Foundation and the UK Trade Policy Observatory at the University of Sussex have warned of dire consequences to household bills.
“Such an outcome - which could see the UK imposing tariffs on EU imports - would increase the annual shopping bills of millions of households by £500, with poorer families taking the biggest hit,” 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.”
According to the report, the cost of the average annual household’s current consumption would rise by £260 and over three million families would see price rises of over £500 a year.
It said the proportionate effect on the poorest fifth of households would be a third greater than on the richest fifth - because lower income families usually spend a greater share of their income on food and other essential items.
The Prime Minister will try to persuade EU leaders to kick start talks on a post-Brexit trade deal when she meets them at the European Council summit on Thursday and Friday.