Brexit has raised EU-imported food prices, complicating the unfolding cost of living in Britain, according to a report.
The United Kingdom in a Changing Europe (UKICE) think tank that trade barriers introduced after leaving the EU led to a 6% increase in food prices in the UK between December 2019 and September 2021, adding to the growing financial pressure on households.
The report found that products with a higher share of EU imports, such as fresh pork, tomatoes and jams, were more affected by products where UK imports were more likely to be produced than the rest of the world, such as fish. tuna and exotic fruits such as pineapple.
Households in the United Kingdom are on the verge of experiencing the worst decline in living standards since the 1950s amid rising inflation driven by rising energy, food and fuel prices. Annual inflation reached 7% in March, the highest since 1992. Economists have warned that inflation, which serves as an indicator of rising living costs, could reach 10% this year amid rising gas and electricity prices, caused by the war in Ukraine.
A report by researchers at the Center for Economic Performance at the London School of Economics, funded by UKICE, found that “the clear and strong impact of Brexit-induced trade frictions” has led to higher prices.
It says Covid-19 can be ruled out as an influencing factor, as there is a link between price increases and the share of EU imports for a particular product. Analyzing trade data collected by the United Nations and price data from the Office for National Statistics, he found that the two most notable increases coincided with Boris Johnson’s election victory in 2019, when a “hard Brexit” became more likely, and the implementation of the post-Brexit trade deal in January 2021
Data from the ONS show that consumer food prices fell during the period analyzed by scientists. Prices have risen sharply in recent months as the cost of living has sprung up. Analysts said that suggests that in the absence of Brexit, food prices could fall further.
The United Kingdom has repeatedly postponed checks on imports of goods arriving from the EU, as ministers have sought to minimize disruptions. The prime minister hinted last week that physical border checks for Brexit on EU food imports, due to be introduced in July, would be postponed for a fourth time amid fears that supplies could be affected.
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Other economists say it is difficult to distinguish the effects of Brexit from other factors such as the Covid-19 pandemic, Russia’s war in Ukraine, financial market movements, bottlenecks in global trade and labor and supply shortages in developed economies. Official forecasts suggest that fuel and utility bills will account for almost half of this year’s rising inflation.
Although the government has highlighted this point, Brexit ministers have previously said leaving the EU will reduce food costs by opening up the UK market to exporters from around the world. Government sources said agricultural commodity prices were linked to global gas costs. “Blaming Brexit is simply wrong,” they added.
Data from the accounting firm UHY Hacker Young shows that companies and consumers in the UK paid 4.8 billion pounds in customs duties on imported goods last year, a new record, which is more than 2.9 billion British pounds a year earlier .
Sean Glansy, a partner in the accounting firm, said part of the increase would be due to the resumption of trade after a pandemic, but that most of it was probably due to leaving the EU. “Brexit tariff increases could not come at a worse time for British businesses and consumers. “Inflationary pressures caused by Covid and the war in Ukraine are being exacerbated by these additional import duties,” he said.
Jonathan Portes, Senior Research Fellow at UKICE, said: “While Brexit is not the main driver of rising inflation or the cost of living crisis, this report provides clear evidence that it has led to a significant increase in food prices that will hit most poor families the hardest. “
A government spokesman said: “Food prices fluctuate each year and depend on a number of factors, including exchange rates and commodity prices. The continued increase in global gas prices has led to increased input costs for the dairy and egg industries, including feed and fuel costs.
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