UK households could be £1,000 worse off because of Brexit, report finds
UK households could be up to £1,000 worse off in the event of a “no deal” Brexit, according to new research by Oliver Wyman.
The consultancy firm said that Brexit could cost the UK economy up to £27 billion in a worst-case scenario where all imported products from the EU become subject to World Trade Organization (WTO) tariffs.
The report, seen by the BBC, says that higher costs for businesses would likely be passed on to consumers. The researchers estimate that higher friction across supply chains and cross border friction would add 2.3% to the price of a basket of household goods.
“While the outcomes of Brexit remain unclear, out analysis shows that any scenario will increase costs for UK households,” said Duncan Brewer, Olivery Wyman partner and author of the research.
In a scenario where the UK reverts back to WTO most-favoured-nation import tariffs, the firm expects the price of a typical weekly grocery shop to rise by £5.50, while a family meal for four at a high street restaurant chain would be £9 more expensive and a pair of trainers would cost £6.75 more.
“Looking across the whole supply chain and taking into account multiple different Brexit outcomes, one thing is clear: Brexit will decrease profits for consumer businesses,” Mr. Brewer added.
“The only question is by how much, which will depend on what deal is negotiated.
“While businesses will do all they can to absorb rising costs, we expect they will be forced to gradually put up prices for shoppers. If they don’t, profits could vanish.”
The report also found that worse-off households would be more affected by the higher costs than wealthy households as they spend a higher proportion of their income after housing costs on groceries.
The research comes a month after Bank of England governor Mark Carney said the vote to leave the EU has left households £900 worse off.
Carney told MPs last month that the Brexit vote has stunted growth by “up to 2%”.
Mr Carney said: “Real household incomes are about £900 lower than we forecast in 2016. The question is why and what drove that difference. Some of it is ascribed to Brexit.”