On Tuesday, a research paper revealed that households in Britain would have to pay an addition of an average of 260 pounds per year for food, transport, and clothing if their government fails to attain a post-Brexit free trade deal with the European Union.
The government of Britain has announced that it would levy World Trade Organization tariffs on goods that are imported from the European Union if it withdraws from the bloc without a settlement, a possibility which some economists put at roughly 25%.
Researchers from the Resolution Foundation and the University of Sussex, a think tank that is focused on the low-paid, said that it would mean tariffs of up to 45% on some dairy imports while some meat products would face a 37% levy.
They said that a normal middle-income household would pay an additional 260 pounds per year, even considering a partial shift to cheaper and British-produced goods.
That was equal to an additional 0.9% in household spending. The poorest 10% of households would see their bills increase by 1.0%, and the richest 10% by 0.8%.
“A ‘no-deal’ scenario … will increase the cost of essential goods, such as food and clothes, which will impact most adversely on those households who already struggle to get food on the table,” said Ilona Serwicka, a Sussex researcher.
The actual price rise would significantly vary depending on individual spending patterns, and some less well-off households could observe their costs increase by more than 500 pounds per year.
On Monday, Philip Hammond, the British finance minister, said that he did not believe that there was an increasing danger of failure to arrive at a Brexit deal before Britain withdraws from the European in March 2019, despite fears among numerous investors.
Some supporters of Brexit have stated that regardless of what the bloc does for UK exports, Britain would benefit from discarding all tariffs on goods imports after it leaves the European Union.
The report on Tuesday said that this could save the common household 130 pounds per year, or 0.5% of typical spending.
However, the researchers stated that some industries, such as meat processing, and the rural parts of England where they are concentrated would experience a big hit in the face of cheap imports and immediately scrapping tariffs would make it more difficult to attain tariff-free access for British exports in future.