‘No deal’ Brexit could push food bills up by £930 per year, say experts

Posted On: 
4th November 2017

Households face a massive hike in shopping bills in the UK crashes out of the EU without a deal, a think tank has warned.

The annual shop for the UK will rise by almost as £1000 if there Britain leaves the EU with "no deal".
PA images

The cost of meat, vegetables, diary products, clothing and shoes would all shoot up in a move which would disproportionally affect poorer families and the unemployed, according to the National Institute Economic Review.​

Negotiations for Britain’s exit from the bloc have already reached a deadlock over the EU’s refusal to start trade talks before the UK settles the divorce bill.

However, the Government has already announced plans to introduce a trade bill that will introduce strict tariffs on European products should Britain crash out of the bloc.

“The overall increase in price in the affected goods is estimated to be 2.7% and this translates into an increase in the overall cost of living of 0.8-1.1% for a typical family, with the unemployed and families, those with children and pensioners hit hardest,” conclude the economists from the University of Sussex and Resolution Foundation.

“This may seem a small number but, in a country in which the real incomes of ordinary families have been stagnant for several years, a loss of this order would have a significant effect on welfare.”

If the UK does pursue the hardest of hard Brexits, then World Trade Organisation (WTO) rules would be reintroduced.

WTO tariffs are highest for fresh food, at 45 per cent and 37 per cent for meat, slapping an estimated extra £930 on to consumer’s shopping bills.

“[This] is a very conservative estimate,” said the report. “We deal only with goods, not the over 60% of expenditure on services; we ignore increases in UK costs of production; we ignore the probable increase in other suppliers’ prices as EU suppliers suffer a decline in competitiveness; and we ignore the inevitable increase in non-tariff frictions in UK–EU trade.”

Nonetheless, the Brexit Secretary, David Davis, warned MPs this week that the government still needed to seriously consider pursuing the no-deal option in the face of alleged EU intransigence over exit negotiations.

A government spokesman said: “While it is the duty of a responsible government to plan for all scenarios, we are clear that a deep and special partnership with the EU is the most likely outcome.

“We are confident of securing a deal which is in the interests of both the UK as a whole and our European partners.”

Brexit supporters have argued the rise in living costs could be offset by growing more food at home and striking trade deals with Australia, New Zealand and America.