Brexit increased the average Briton’s food spending by 210 pounds ($254) over two years, according to a new study that highlights the economic impact of non-tariff barriers on consumer prices.

Household spending on food rose by 6% in the two years to the end of 2021, two years after the UK officially leaves the European Union, according to research by the London School of Economics’ Center for Economic Efficiency (CEP).

Lower-income households were hit hardest by rising costs, with Brexit-induced price increases adding 1.1% to the overall cost of living – more than the 0.7% rise experienced by the richest 10.

Overall, British consumers paid £5.8 billion ($7 billion) in extra food costs over two years, according to the study.

The British government did not respond to CNBC’s request for comment on the findings.

Britain voted to leave the EU in June 2016, but several years of difficult negotiations followed before it officially left the Union in January 2020 and left the single market and customs union in January 2021.

While trade between the UK and the EU remains tariff-free under the agreement’s rules, extensive customs controls, rules of origin requirements and sanitary measures have been added to trade in animals and plants, increasing friction for importers and exporters.

“After leaving the EU, the UK traded a deep trading relationship with few barriers to trade for one where a wide range of checks and forms are required to cross the border,” said Richard Davies, a professor at the University of Bristol and co-author of the study.

Consumer prices increased for goods with high non-tariff barriers, while there was no significant increase for goods with low non-tariff barriers.

This shows that EU exporters and UK importers faced higher costs due to the new barriers, of which between 50% and 88% were passed on to consumers, the report said. “

Companies faced higher costs and transferred most consumers to them. In the two years to the end of 2021, Brexit has increased food prices overall by around six per cent,” added Davies.

The report also found that while the UK’s domestic food producers benefited from less competition, their gains were outweighed by losses to consumers of more than £1bn.

Meanwhile, the earnings did not generate any revenue for the government.

The research comes ahead of an acceleration in inflation this year as a result of Russia’s invasion of Ukraine and wider supply chain disruptions. However, the study found that the increase in non-tariff barriers was a “factor” in the price increase observed this year.

Annual price growth in the UK hit a 41-year high of 11.1% in October, while food inflation hit 12.4% in November.

British consumers can now expect to pay £682 more for food this year, according to the latest research from research firm Kantar.

Meanwhile, inflation in the Eurozone slowed slightly to 10% in November.

The study comes as the country braces for its longest recession in history and a worsening cost-of-living crisis.

The OECD said last week that the UK was lagging well behind other advanced economies, with Britain the only economy in the G7, the group that includes Canada, France, Germany, Italy, Japan, the US and the UK, that had not yet returned to growth. before the pandemic

Source: news.ro