According to a latest report, Brexit trade barriers would reduce UK household income by up to £1,000 a year, reported the BBC.
The cost to the UK economy could total £27bn because of the most negative scenario of high Import Tariffs And High Regulatory Barriers, Says Global Consultancy Firm Oliver Wyman.
Supply chain disruption could also erode business profits for supermarkets and restaurants.
The report further argues that customers would have to bear the brunt of the rise in prices.
The analysis is anticipated to be made public next week. It argues that there would an increase in red tape costs even if the most favorable environment of no tariffs and few regulatory barriers is managed to be created.
Household costs are likely to be increased by 1% a year, or £250 per household because of enhanced need for paperwork and delays for customs checks the report will argue when published. £6.8bn would be the total cost to the economy because of that.
Supporters of Brexit claim that Britain would be able to flourish in a post Brexit scenario through a focus on the domestic economy and claim that the reports of the very significant negative economic impacts after Brexit are just cooked up.
Desire to strike a relationship with the EU post Brexit which would be as “frictionless” as possible in terms of trade has already been expressed by the UK government.
“While the outcomes of Brexit remain unclear, our analysis shows that any scenario will increase costs for UK households,” said Duncan Brewer of Oliver Wyman, a consultancy firm. This firm has been engaged in a number of research work about the possible economic impact of Brexit for the financial services sector and retailers. The company has also done some work for the UK government.
“A Brexit deal that results in no new tariffs with the EU is still likely to increase the red tape costs of imports, driving down profits for businesses, and driving up prices for consumers,” Mr Brewer continued.
“Looking across the whole supply chain and taking into account multiple different Brexit outcomes, one thing is clear: Brexit will decrease profits for consumer businesses.
“The only question is by how much, which will depend on what deal is negotiated.
“While businesses will do all they can to absorb rising costs, we expect they will be forced to gradually put up prices for shoppers. If they don’t, profits could vanish.”
The analysis by the firm examines different sectors and the potential effects of UK’s new relationship with the EU.
The report is expected to suggest that even under a most liberal Brexit scenario modelled, there would be a fall of one third in the profits of a supermarket chain with annual revenues of £10bn.
(Adapted from BBC.com)