Price rises for millions if no EU deal is signed

Millions of families would be hit by price rises of more than £500 a year, with the poorest taking the biggest hit, if Brexit happens without the UK reaching a withdrawal deal with the European Union, a report has warned.

The average yearly household bill would rise by £260 in a “no deal” scenario in which Britain imposes the same tariffs on the EU as it does for other World Trade Organisation (WTO) countries.

But three million families could see price rises of more than £500, while the proportionate impact on the poorest fifth of households would be 33 per cent greater than on the richest fifth, the joint report by the Resolution Foundation and Sussex University’s UK Trade Policy Observatory found. It shows that walking away from deadlocked Brexit negotiations would be the “worst possible outcome”, the authors said.

The analysis of a “no deal” scenario where the UK imposes WTO “most favoured nation” tariffs on the EU found that levies on dairy imports would rise by 45 per cent, meat products by 37 per cent, and clothing, footwear, drinks and tobacco by 10 per cent.

These tariffs would feed through into significant price rises, with the average price of dairy goods rising by 8.1 per cent, meat products by 5.8 per cent and cars and other vehicles by 5.5 per cent.