Brexit could cut food prices as farmers will be freed from Brussels red tape, according to a report.
The UK was on track to be hit with additional compliance costs worth up to £7.5 billion a year before it decided to leave the EU, the Institute of Economic Affairs (IEA) said.
Compliance with existing agricultural regulations – such as the Common Agricultural Policy which provides subsidies to EU farmers – are already costing England at least £600 million a year, the think tank said.
The report from the Institute of Economic Affairs suggests that food prices could fall as farmers are freed from EU red tape
If a review of existing legislation led to an EU-wide ban on pesticides, the UK food chain could see lower yields, higher prices and be hit with additional raw material costs of about £7.5 billion a year that could be passed on to shoppers, the paper explained.
Mark Littlewood, IEA director general , said: ‘EU member states face staggering food price rises unless the march of increased regulation is halted. The UK is fortunate that it now has the opportunity to repatriate control of its farming regulations.
‘It’s crucial that decisions stem from good scientific evidence, and pay attention to consumers’ interests and the potential crippling costs that overregulation can have in pushing up food prices and the cost of living.’
The report contradicted claims from Nick Clegg that the price of cheese, chocolate and wine could soar if Theresa May goes for a ‘hard’ Brexit.
The former deputy prime minister said yesterday that fears over the price of Marmite were just the tip of the iceberg – with other popular goods set to be hit with a ‘triple whammy of punishing tariffs’ if we leave the single market without a new trade deal.
As the Lib Dems published a report on the impact of Brexit on the food and drinks industry, Mr Clegg predicted that automatically reverting to the World Trade Organisation’s trading rules would have serious consequences for consumers.
Nick Clegg, seen during a tour of TV and radio studios yesterday, said prices of everyday goods will soar if Theresa May goes for a ‘hard’ Brexit
Tariffs could affect imports of cheeses like Camembert, as well as exports of UK cheeses
‘It’s clear that Marmite was just the tip of the iceberg,’ he said.
‘A hard Brexit will lead us off a cliff edge towards higher food prices, with a triple whammy of punishing tariffs, customs checks and workforce shortages.
‘The only way the Government will be able to avoid this outcome is if it maintains Britain’s membership of the single market.
‘We must hold Theresa May’s Government to account and fight to ensure what comes next is best for British consumers and businesses.’
The Lib Dem report said £11 billion worth of agricultural products the UK sells to the EU each year would be hit with an average tariff of 22.3 per cent.
While tariffs on beef exports would be set at 59 per cent, chocolate at 38 per cent, cheese at 40 per cent and wine at 14 per cent.
Chocolate could also be covered by tariffs if we leave the EU without a new trade deal, according to Mr Clegg
Under WTO rules, tariffs will also apply to all imports into the UK until a trade deal with the EU is struck.
The higher tariffs could lead to a significant increase in food prices, compounded by increased costs to producers from extra red tape such as customs checks and labour shortages caused by the end of EU free movement.
The report also warns of a short-term hit to food prices in the coming months, as supermarket supplier contracts expire and have to be renewed at current exchange rates, which could force some companies out of business.
There were shortages of popular products including Marmite in Tesco stores last week after Unilver tried to impose a 10 per cent price hike to make up for the fall in sterling