17 June 2018

Financial Times: ‘No deal’ Brexit would cost UK households £1,000 a year

The study by consultants Oliver Wyman suggests that whatever deal is struck with Brussels, UK household spending will rise and consumer businesses’ profitability will fall after Brexit.

Under a “no deal” Brexit scenario, where all imported goods from the EU were subject to World Trade Organization tariffs, the overall cost to households would be £27bn a year, or nearly £1,000 per household.

“In a scenario where the UK reverted to WTO most-favoured-nation import tariffs, we expect the price of a typical weekly grocery shop to go up by £5.50, a family meal for four at a high street restaurant chain to increase by £9, and a pair of trainers to cost £6.75 more,” said Duncan Brewer, Oliver Wyman partner and author of the research.

Household costs to increase

The research modelled five of the most commonly discussed scenarios of an UK exit from the EU: a deal that left the UK out of the customs union but in the single market, and vice versa; one in which the UK achieved a bespoke customs and single market deal; and two in which the UK left the single market and customs union but, in one alternative, applied WTO tariffs to imports and, in the other, unilaterally decided to apply zero tariffs to imports.

It found that the annual average increase to household costs under the scenarios ranged from £245 to £961 annually. It also found that, for each 5 per cent that sterling devalued against the US dollar and the euro, household costs increased by a further £380 a year.

Any subsequent free trade deals, which allowed the UK to move to zero-tariff trade with all non-EU countries, would reduce costs by £120 to £170. [...]

Full article on Financial Times (subscription required)

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