The whopping figure challenges the numbers reported in a study published earlier this week by the Institute for Fiscal Studies , which claimed the UK will only see a small reduction in prices after Brexit.
Macroeconomist Professor Patrick Minford, chair of the Economists for Free Trade group, dismissed the IFS numbers as “wrong” as he said they failed to consider crucial aspects related to the tariffs imposed by the EU.
Economists for Free Trade calculated the gain the UK will have from leaving the customs union will amount to four percent of the GDP – roughly £80billion.
According to Professor Minford, the IFS report fails to consider two specific sectors with a huge impact on the British economy and UK households, the food and manufacturing industries, where the tariffs imposed are much higher, which makes the IFS assumptions “wrong”.
He said: “The IFS has left out in its report three crucial things, which means their figures are nonsense.
“First of all, the researchers haven’t looked in detail at food tariffs, which are much higher than the 3 per cent they assumed.”
The protection of food is about 20 percent on average, and for some products groups tariffs can be much more expensive to consumers.
The tariff on dairy is, for example, at 37.4 percent, the one on sugar is at 24.6 percent and the tariff on processed chicken is as high as 88 percent.
Professor Minford’s estimation is supported by the work of economy experts Liam Halligan and Gerard Lyons, who in 2017 calculated that food in the UK is approximately 17 percent more expensive as a result of tariffs.
Professor Minford said: “The IFS also didn’t look carefully at the manufacturing industry.
“The tariff barriers for this sector are around 4 per cent, but the non-tariff barriers are at about 16 per cent, according to our estimates, so the IFS’ figure is about five times wrong”.
Non tariff barriers include anti-dumping duties, a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below the fair market values.
Lastly, the macroeconomist said the price of land and labour also have a huge impact on the amount of money spent by remaining in the UK.
Minford said: “The IFS missed one indirect effect caused by the removal of protections.
“When you tax the prices on food and manufacturers you create a direct effect on consumers’ prices, which leads to a greater competition in the markets, which in turn causes the costs of land and labour to rise.
“So as a consequence, if you reduce the protection on food, farmers will pay a different figure for land.
“The IFS underestimated this aspect hugely.”
The Common Agricultural Product also place tariffs on farming machinery and equipment such as tractors that are imported from outside of the EU, which obliges farmers to increase their prices and, as a consequence, raises the pressure on household budgets.
Economists for Free Trade calculated the gain the UK will have from leaving the customs union will amount to four percent of the GDP.
To read the Daily Express’s report in full, click here.