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Will Brexit raise the cost of living?

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journal contribution
posted on 2023-06-09, 12:37 authored by Stephen Clarke, Ilona Serwicka, L. Alan Winters
This paper considers two aspects of this question. First, Brexit has already induced a devaluation of sterling of around 14 per cent since June 2016, which has started to work through to consumer prices: between June 2016 and July 2017 consumer prices increased by around 2.5 per cent. Second, while it is not government policy, nor the desire of the UK public, that the outcome of negotiations is a ‘MFN Brexit’, this remains a distinct possibility. Thus we ask how the imposition of tariffs on imports from the EU will work through into consumer prices. Making very conservative assumptions, we conclude that ‘MFN Brexit’ will increase the average cost of living by around 1 per cent and increase it for 8 per cent of households by 2 per cent or more. We present results for different groups of households according to their employment and structural characteristics and show that the impact will generally be largest on unemployed, single parent and pensioner households.

History

Publication status

  • Published

File Version

  • Accepted version

Journal

National Institute Economic Review

ISSN

0027-9501

Publisher

SAGE Publications

Issue

1

Volume

242

Page range

R37-R50

Department affiliated with

  • Economics Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2018-03-26

First Open Access (FOA) Date

2018-03-26

First Compliant Deposit (FCD) Date

2018-03-24

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