Brexit will hit you in the shopping trolley
South of the border where there is a strong consensus that Brexit is a bad idea inflicted upon us, the debate is primarily economic. In the north and Britain the debate is more emotional and extremely ideological, and many participants routinely ignore facts and figures that don’t suit their predetermined positions.
Brexit Border Blog set out to inject some measurable outcomes into the debate and in that we were highly reliant from the start on the Economic and Social Research Institute. In its first study, Working Paper 550 in November 2016, the ESRI set out the likely impact on various exporting sectors and demonstrated convincingly that the main damage would come in the agri-food sector.
Ordinary people know in a general sort of way that damage to the economy is bad for them, but they don’t know how to measure its likely impact on their household economy. The latest ESRI report, “Brexit and Irish Consumers“, will bring it all home.
Tariffs will not just damage exports, they will also make imports dearer and practically everything that moves in the Irish economy contains, depends upon or is linked to imports from Britain.
The consumption basket of the average Irish household will increase in cost by between 2% and 3.1% depending on what sort of Brexit we eventually get; in money terms, between €892 (increase in non-tariff trade costs) and €1,360 (tariffs plus other trade cost increases).
Like most economic burdens, the cost of Brexit will not be fairly or evenly spread: “Households with lower income levels would face considerably higher percentage increases as they tend to consume a higher share of products that would be most affected by increases in tariffs and trade costs.”
Poorer households spend a higher proportion of income on food:”… we find that the share of household expenditure on food declines considerably as household income increases. This is an important determinant of our overall results as food products have the highest tariff listings in the EU’s WTO tariff schedule, which we assume would be the fall-back position in the absence of a trade deal or transition agreement by the Brexit deadline of March 2019.”