Brexit added an average of £210 to household food bills over two years to the end of 2021, costing consumers a total of £5.8 billion, a new report has found.
Furthermore, according to the report, food prices have increased by 6%, and lower-income household have been most affected by this increased cost the most.
Households in the lowest decile experienced an increase in the cost of living 52% higher than households in the top decile.
The report, which was published today (Thursday, December 1), presents research by the Centre for Economic Performance (CEP) at the London School of Economics into the affect of non-tariff barriers (NTBs) on consumer prices and welfare.
NTBs, which the authors – Jan David Bakker, Nikhil Datta, Richard Davies and Josh De Lyon – of Non-tariff barriers and consumer prices: Evidence from Brexit have called the “main policy barrier to trade” have risen due to EU-UK trade now being subject to customs and a regulatory border.
They found that this rise in NTBs affected price, but that the rise in prices was primarily driven by products with high NTBs; there was so significant rise in prices for products with low NTBs.
Richard Davies, an associate of CEP’s growth programme and a professor at Bristol University and study co-author, said: “The UK inflation rate rose above 11% in 2022, the highest rate in 40 years.
“Many factors, affecting both supply and demand for goods and services, are involved. One factor in this high inflation has been the rise in non-tariff barriers for trade with the EU.
“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.
“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% overall.”
The changes have benefitted domestic producers of food, who now have less competition from European imports, the authors added.
However, these gains to domestic firms are outstripped by the loss to domestic consumers by more than £1 billion; and, unlike regular tariffs, NTBs do not generate any revenue for the government either.
The report concluded that NTBs are an important impediment to trade and should be a “first-order concern, at least on par with tariffs”, for policy makers “interested in low consumer prices”.
