Retail could be hit the hardest while construction may stay unaffected
According to a leaked government analysis, Britain’s retail sector could be hit the hardest by a 20 per cent rise in costs after Brexit, while car makers could see a 13 per cent hike in manufacturing costs outside the EU.
The leaked document, published by Sky News, shows the potential impact of non-tariff barriers like customs checks and rules of origin regulations on various economic sectors.
The data further reveals that defence, education, and health could see 6-16 per cent hikes, while financial services could go up between 5 and 10 per cent. There can also be a 8-16 per cent hike for food and drink, and 6-12 per cent jump for chemical and plastic. Construction, meanwhile, faces no extra costs.
Tariff equivalent of non-tariff barrier costs, by sector:
- Machinery, equipment and energy: 2% to 6%
- Chemical, rubber and plastic: 6% to 12%
- Other manufacturing: 5% to 12%
- Motor vehicles: 5% to 13%
- Food and drink: 8% to 16%
- Agriculture: 8% to 17%
- Construction: 0%
- Business services: 0% to 6%
- Other services: 2% to 10%
- Financial services: 5% to 10%
- Defence, education and health: 6% to 16%
- Retail and wholesale: 7% to 20%
The document was circulated to members of the key Cabinet sub-committee, due to meet today.
A Government spokesperson has clarified to Sky News: “This document does not represent Government policy and does not consider the outcome we are seeking in the negotiations. As ministers clearly set out in the House of Commons, this is provisional internal analysis, part of a broad ongoing programme of analysis, and further work is in progress.
“We are seeking an unprecedented, comprehensive and ambitious economic partnership – one that works for all parts of the UK. We are not expecting a no-deal scenario.”
Meanwhile, The Guardian reports that the analysis predicts that crashing out of the EU without a deal could cost the UK £80bn over the next 15 years. The papers also reveal how the government will need to borrow £120bn more over the next 15 years if there is no deal.