Brexit has cost UK households more than £5.8bn in higher food bills, according to new research linking Britain’s exit from the EU to soaring inflation.
Leaving the bloc has added an average of £210 to Britons’ food costs over the two years to the end of 2021, according to a study by the Centre for Economic Performance (CEP).
The experts based at the London School of Economics said their analysis confirmed that Brexit alone had increased UK food prices by 6 per cent.
Richard Davies, professor at Bristol University and co-author of the study, said Brexit’s non-tariff trade barriers were a key factor behind the highest inflation rates in 40 years.
“In leaving the EU, the UK swapped a deep trade relationship with few impediments to trade for one where a wide range of checks, forms and steps are required before goods can cross the border,” he said.
Prof Davis added: “Firms faced higher costs and passed most of these onto consumers. Over the two years to the end of 2021, Brexit increased food prices by around 6 per cent overall.”
The CEP study also found that since low-income households spend a greater share of their income on food than wealthier families, Brexit-driven price rises had a proportionately greater hit on Britain’s poorest.
It found that Brexit accounted for a 1.1 per cent rise in the overall cost of living to the poorest 10 per cent of households – more than the 0.7 per cent Brexit-induced rise in living costs felt by the top 10 per cent of households.
Dr Nikhil Datta, assistant economics professor of economics co-study author, said: “Since poorer households spend a larger fraction of their income on food, they are hit harder.”
The economists said the huge burden of customs checks, rules of origin requirements and sanitary and phytosanitary (SPS) paperwork for animals and plants had damaged Britain’s food industry and put up prices.
Both UK importers and EU exporters have faced higher costs due to these new barriers. The CEP report said evidence suggested that between 50 and 88 per cent of these costs have been passed on to consumers.
“The policy implications are stark – non-tariff barriers are an important impediment to trade that should be a first-order concern, at least on par with tariffs, for policymakers interested in low consumer prices,” said Dr Datta.
Rishi Sunak has rejected any post-Brexit alignment with EU rules to reduce the red tape, despite growing calls for a new approach and reports the government may consider “Swiss-style” deal to gain single market access.
Earlier this week Tony Blair Institute said the PM should agree to align with parts of the EU single market for goods, and even consider “revisiting” the Brexit trade deal already agreed with Brussels.
The CEP study findings come as Bank of England chief economist Huw Pill said Brexit was partly to blame for high levels of inflation in the UK.
“Brexit has probably reduced some of the competitive pressure in the goods market, because it just is harder to import things into the UK from Europe … that has probably proved to be somewhat inflationary,” Mr Pill told a conference on Wednesday.
Asked about the wider impact of Brexit on economic woes, the Bank economist added: “Brexit plays a part, but I don’t think it’s the whole story and probably only part of the story. But to my mind it has had some effect.”
The latest figures show food inflation accelerated further to 12.4 per cent from October’s 11.6 per cent – the highest rate on record as rocketing energy, animal feed and transport costs forced up prices.
“Winter looks increasingly bleak as pressures on prices continue unabated,” British Retail Consortium chief Helen Dickinson said on Wednesday.
