Leaving the European Union added a total of £5.8bn or an average of £210 per household to UK consumers’ food bills over the two years to the end of 2021, according to new research.
The analysis by the Centre for Economic Performance (CEP) at the London School of Economics showed that Brexit alone had increased UK food prices by 6%.
As low-income households spend a greater share of their income on food, this had a proportionately greater impact on the poorest people.
The CEP study found that Brexit accounted for a 1.1% rise in the overall cost of living for the poorest 10% of households, compared with the 0.7% rise in living costs felt in the top 10% of households.
Looking at the mechanisms behind the price rises, the study authors noted that trade within the EU “goes far beyond the elimination of tariffs within its borders: it also minimises non-tariff barriers to trade through, for example, mutual recognition of standards”.
While the Trade and Cooperation Agreement, which came into force in January 2021, ensures that trade between the UK and the EU remains tariff-free, there are more now non-tariff barriers between the UK and the EU compared with trade pre-Brexit.
It is these non-tariff barriers that have affected prices, the research showed.
“In leaving the EU, the UK swapped a deep trade relationship with few impediments to trade for one where a wide range of checks, forms and steps are required before goods can cross the border,” explained study co-author Richard Davies, an associate of CEP’s growth programme and a professor at Bristol University.
“Firms faced higher costs and passed most of these onto consumers. Over the two years to the end of 2021, Brexit increased food prices by around 6% overall.”
Study co-author Nikhil Datta, an associate of CEP’s labour markets programme and an assistant professor of economics at Warwick University, added: “The policy implications are stark: non-tariff barriers are an important impediment to trade that should be a first-order concern, at least on par with tariffs, for policymakers interested in low consumer prices.”
