The abolition of tariffs on imported goods post Brexit would have little scope to significantly cut consumer prices, a report by the Institute for Financial Studies has found.
The report predicted that the total abolition of tariffs would reduce prices by 0.7-1.2%, which it said could have positive economic benefits in the long-run but may be damaging to UK industries in the short-term.
If tariffs were only abolished on goods not produced in the UK the expected gains for consumers, based on the average basket purchased by a household, would be less than 0.4%.
The report states: “Currently, the average tariff applied on the sorts of goods the UK imports is not particularly high – at around 2.8% if we account for the EU’s various agreements with other countries.
“Under some quite optimistic assumptions about the price changes that are likely to follow tariff reductions, we estimate that complete abolition of all tariffs would reduce prices faced by households by about 0.7–1.2%.”