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Joseph Rowntree Foundation: Modelling the Impact of Post-Brexit Trade Agreements on the Cost of Living in the UK

Cambridge Econometrics was commissioned by the Joseph Rowntree Foundation to explore the impact of Brexit on poverty in the UK, focusing specifically at the poorest 1/5th of households.

Approach

Our experts modelled a range of post-Brexit trading agreements, providing detailed results on the potential impacts on the cost of living, wages and employment looking ahead to 2030.

Using macroeconomic model E3ME, we took a scenario-based approach to model outcomes from low-income workers in the UK under a range of possible future trading relationships with the EU, ranging from a Norway scenario where the UK remains in the European Economic Area (EEA) to a No Deal scenario, where the UK-EU trading relationship reverts to WTO rules.

Key Findings

1

In all scenarios, the cost of living is likely to rise and real wages to fall after the UK leaves the EU in the immediate period, however a ‘no deal’ scenario is likely to have the largest negative effects on costs and wages.

2

This ranged from staying in the single market (a ‘Norway’ scenario) to ‘no deal’, taking into account tariffs and non-tariff barriers to trade, immigration and investment.

3

Under a ‘no deal’ scenario the study estimates that living costs for low-income households are estimated to increase by £480 per year and that food prices would rise by 8%.

Get in Touch

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Shyamoli Patel

Head of Economic & Social Policy Division

t: +4 1223 533145

e:sp@camecon.com