The research found that Brexit added nearly £6 billion to UK food bills in the two years to the end of 2021, affecting the poorest households.
Researchers from the London School of Economics (LSE) found that the cost of food imported from the European Union rose due to extra red tape, adding £210 to average household food bills over 2020 and 2021.
And they said that because lower-income families spend a greater portion of their income on food, the impact of Brexit on their purchases was disproportionately larger.
The research comes the day after data from Britain’s Retail Trades Authority showed food price inflation in the UK hit a record 12.4% in November as prices of staples such as eggs, dairy products and coffee rose.
Researchers at the Center for Economic Performance (CEP) at LSE studied micro-data tracking trade flows and consumer prices for UK food products to determine the transfer of the cost of Brexit-related routines to homeowners.
“We found that leaving the EU increased food product prices by 3% annually, which resulted in an increase of 6% over a two-year period,” they say in their report, called Non-tariff Barriers and Consumer Prices: Evidence from Brexit.
Its calculations translated into £5.84 billion for the food market cost alone, which equates to £210 per household.
The CEP found that the price hike caused by Brexit increased the overall cost of living for the poorest households by 1.1% – 52% more than the 0.7% rise felt by the top 10% of households in Britain.
In 2015, the year before the referendum, 77% of food imports were from the European Union.
After the December 2019 elections, the researchers found an immediate spike in food prices from the EU as companies that depended on the products and ingredients “immediately began passing the cost of customs on to consumers,” the report says.
Regulatory costs differed by product, with fresh red meat products identified as having a high “non-tariff barrier” (NTB) cost due to the paperwork required, but vegetables such as onions, carrots and broccoli costing close to zero.
The researchers found higher prices for products with high NTBs with significant lower cost for products in the low or zero NTB categories.
The CEP said the EU’s single market was a “deep” trade bloc that eliminated tariffs, but also eliminated regulatory differences on food standards that allowed friction-free trade between member states including the UK before Brexit.
Lord Frost’s Brexit trade agreement signed at the end of the transition period in December 2020 ensured duty-free trade with the EU but created trade barriers in the form of customs and original paperwork rules and scrutiny of regulatory standards for agri-food products.
“In leaving the EU, the UK replaced a deep trading relationship with few barriers to trade with one that required a wide range of checks, forms and steps before goods could cross borders. Businesses faced higher costs,” said Richard Davies, a professor at the University of Bristol and co-author of the report. Most of it is sent to consumers.
He said rising non-tariff barriers (NTBs) to trade with the EU had contributed to the 11% inflation the UK is seeing, the highest in 40 years.
The report noted that one of the benefits of Brexit is that domestic food producers now face less competition from European imports.
But it added: “The gains for domestic businesses are outweighed by more than £1 billion in losses for domestic consumers. In addition, unlike normal tariffs, non-tariff barriers generate no revenue for the government.”
Nikhil Datta, assistant professor of economics at the University of Warwick and co-author of the study, said: “The policy implications are stark: non-tariff barriers are such an important barrier to trade that they should be a concern of the first order, at least on par with tariffs, for interested policymakers.” at lower consumer prices.