Brexit Is Already Costing You Hundreds More Every Year, Experts Say
Brexit is already costing families hundreds more every year, according to experts.
A Centre for Economic Performance (CEP) report has analysed how the referendum vote has impacted inflation, wages and living standards ahead of the autumn budget on Wednesday.
It shows UK households are already paying a high economic price and that Brexit is costing the average household £7.74 per week through higher prices – equivalent to £404 a year.
Higher inflation has also reduced the growth of real wages – and the impact of price increases is equivalent to a £448 cut in annual pay for the average worker.
Report co-author Dr Holger Breinlich, of the University of Nottingham, said: “Our findings show that the Leave vote has led to a sharp increase in inflation. At a time of growing disenchantment with austerity, this is clearly unwelcome news for living standards across the UK.”
According to the data gathered, households at all income levels and in all UK regions have been affected. The costs have been evenly shared across the income distribution, but not across regions, with the rise in inflation lowest for households in London, while Scotland, Wales and especially Northern Ireland have been worst hit.
The largest inflationary effects are for product groups with high import shares, including bread and cereals; milk, cheese and eggs; coffee, tea and cocoa; beer; wine; furniture and furnishings and jewellery, clocks and watches.
The report concludes the referendum result was “an unanticipated shock to the UK economy that increased uncertainty and reduced the expected future openness of the UK to trade, investment and immigration with the EU”.
Labour MP Chuka Umunna, a supporter of the Open Britain campaign against hard Brexit, said: “Working families across Britain are already feeling the effects of the Brexit squeeze. The collapse in the value of the pound after the referendum has increased inflation and caused the price of vital goods to soar ahead of wage growth. And we have seen growth slow, car sales fall, and companies already begin to move jobs out of the UK.
“Brexit is making people worse off right now. Leave campaigners and government ministers have repeatedly promised that Britain will not be left worse off by leaving the European Union, but families are feeling the pinch now – imagine how much worse it will be if Britain undergoes the hard and destructive Brexit ministers are aiming for.”
Umunna added that those who voted Leave did not “vote to be worse” off.
“The British public have a right to look at the new facts that are emerging and keep an open mind about whether this is really the best option for our country,” he said.
Dr Dennis Novy of the University of Warwick, who also contributed to the report, said the research was not a Brexit forecast.
He added: “It is about the costs of Brexit that have already materialised. Households all across the country are hit by higher inflation – without matching pay rises. The increase in inflation can be directly traced back to last year’s referendum when the sterling exchange rate dropped sharply.”
On the same day, Parliament’s business, energy and industrial strategy select committee has also published written evidence submitted to its Brexit inquiry on the aerospace industry.
Experts including Boeing, Airbus, the Aerospace Technology Institute and Unite the Union say its impact may see the sector also forced to contend with huge extra costs.
Committee chair and Labour MP Rachel Reeves said: “The evidence we have received suggests the impact of Brexit and increased customs checks could mean a potential £1.5bn in added costs for the UK aerospace sector.
“That is extremely worrying and risks making our aerospace industry less competitive and driving up costs at a crucial time for our economy. The extra costs could have a negative impact on future investment decisions.
“Our committee is keen to hear from the industry what it wants from the government to ease their uncertainties and ensure the smoothest possible transition as we leave the EU.”
The submissions were published ahead of the committee’s public evidence session on Tuesday, when MPs will consider how different scenarios relating to future customs and trading arrangements might affect aerospace in the UK, and consider what the government should be seeking to achieve in negotiations.
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