Brexit could push up food prices, IFS report shows

The Institute for Fiscal Studies said that the lowest 10 per cent of families would be the most affected

A report released by the Institute for Fiscal Studies (IFS) has found that Brexit could have a “substantial impact” on UK food prices, with the worst effects being felt by the poor.

The report states that the implementation of trade tariffs and a drop in the exchange rate could increase the price of food.

Currently, 30 per cent of food in the UK is imported, 70 per cent of which is from the EU. According to the report, if the UK leaves the Customs Union, that could increase prices that have already risen due to the drop in the pound.

If the UK was to leave the Customs Union, trade tariffs would be enforced on goods coming into the UK from the EU. A tariff acts in the same way as a tax, being placed on a specific good at a rate that is decided by the country it is entering.

“This report further confirms the damage which taking us out of the EU is likely to do to our economy – and the threat of an extreme Brexit” Scottish Brexit Minister Mike Russell

The report predicted that low-income households will be more affected by the increase in food prices: “The lowest-income tenth of households allocate 23 per cent of their spending to food, compared with 10 per cent for the highest-income tenth. Poor households will, therefore, be more affected by rises in the general level of food prices.”

According to the IFS, the UK will have to make a post-Brexit trade deal with the EU to keep tariffs low. If it fails to do so, then it is “likely tariffs would be imposed on EU imports into the UK. his is because the UK would be unable to impose zero tariffs on imports from the EU without also extending tariff-free access to all other WTO members.”

“Nobody voted for the price of food to go up – but that’s exactly what’s risked by Theresa May and Jeremy Corbyn’s plans for a hard Brexit, and the poorest households will suffer the most.” SNP MSP Stuart McMillan

Scottish Brexit Minister Mike Russell said: “This report further confirms the damage which taking us out of the EU is likely to do to our economy – and the threat of an extreme Brexit, outside the single market and the Customs Union will undoubtedly cause severe long-term economic damage, hitting jobs, growth and living standards.

“We will continue to push for a seat at the negotiating table so that we do all we can to protect Scotland’s interests and to try to mitigate the damage that Brexit will cause.”

SNP MSP Stuart McMillan told the National: “This is just the latest evidence of the needless damage that will be caused if the UK leaves the single market.

“Nobody voted for the price of food to go up – but that’s exactly what’s risked by Theresa May and Jeremy Corbyn’s plans for a hard Brexit, and the poorest households will suffer the most.”

McMillan also took aim at the Labour position on Brexit, saying: “There is no majority in the House of Commons for the Tories’ extreme Brexit without Labour’s support – Labour can help stop it, but instead they are arguing themselves into supporting a harder Brexit than the Tories.”

Shadow Scottish Secretary Lesley Laird said: “The absolute priority for our economy now is to ensure we secure an alternative to Theresa May’s damaging Brexit plans.

“Jobs, the economy and retaining the benefits of the single market and the customs union are our top priority.”

Picture courtesy of (Mick Baker)rooster

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