Over 3m low-income families would be about £500 worse off as tariffs on EU goods are imposed and high street prices rise.
Were Britain to drop out of the EU without a trade deal — a scenario that appears increasingly possible after the government admitted they were planning for it — low-income households would be hit the hardest, a new report shows.
A Brexit ‘no deal’ would cost the average household £260, as food and other goods prices increase sharply as tariffs are imposed, the report from the Resolution Foundation found.
3.2m households on the lowest incomes would see their costs increase by £500; ‘poorer households and less affluent parts of the country will be harder hit’, the report claims.
If the UK were to crash out of the single market, it’s likely its trading relationship with the EU would revert to World Trade Organisation (WTO) rules and import tariffs on food and goods — Britain imports about a quarter of its food from the EU — would be imposed and prices would rise across the board.
Tariffs on clothing, footwear, beverages and tobacco would rise by 10 per cent, the report claims. Tariffs on dairy products will rise by 45 per cent and by 37 per cent for meat products, it adds.
In this scenario, the report says:
- The price of clothing will rise by 2.4 per cent.
- The price of transport vehicles will rise by 5.5 per cent.
- The prices of dairy goods will rise by an average of 8.1 per cent.
- the price of meat products would rise by 5.8 per cent.
Stephen Clarke, an 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.”
Stephen Doughty MP, a leading supporter of campaign group Open Britain, said:
“It’s clear that the no-deal Brexit Theresa May is threatening will make working people in this country worse off, with the very poorest paying the price for the Government’s ideological choice of a hard and extreme Brexit.
“Leaving the EU with no deal will erect massive barriers to trade. Given that we import 20 per cent of all the food we eat from Europe, this will make the weekly shop more expensive for working families.”
With the disastrous economic impacts of a ‘no deal’ on Brexit exposed, one would hope now the government would stop bluffing and get serious on negotiating a trade deal.Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.