Lower income households would be disproportionately affected should the UK revert to WTO tariffs
Exiting the EU without a trade deal and reverting to WTO ‘most-favoured nation’ (MFN) tariffs with the EU would lead to significant price rises across a range of goods, with low-income households facing the biggest cost pressures. This is according to a new joint-report published today (Tuesday) by the Resolution Foundation and the UK Trade Policy Observatory at the University of Sussex.
While there is much debate, even within Cabinet, about the wider challenges and opportunities of a ‘no deal’ scenario, the one certainty is that it will lead to a major change in the UK’s trade tariffs.
Switching Lanes examines what impact this concrete change would have on the prices of household goods, and what different ‘no deal’ post-Brexit trade policies could mean for consumers.
The report comes ahead of a crucial EU Commission meeting later this week, at which the Prime Minister is keen to kick-start discussions of the UK’s future trading relationship with Europe.
The government says it wants to negotiate a comprehensive free trade agreement with the EU that will keep tariffs at zero. However, it has also stated that it is preparing for a ‘no-deal’ scenario, in which the UK exits the EU without a trade deal and imposes the same tariffs on the EU as it does for other WTO countries. The report models this and an alternative ‘no deal’ scenario, advocated by some economists, in which the UK unilaterally reduces all tariffs to zero after Brexit.