Britain’s exit from the EU has added 6% to UK food prices, according to a Bank of England official, as inflation has reached a 41-year high.
Dr Swati Dhingra also stated that British workers had taken a 2% real-terms wage cut as a result of the UK’s exit from the EU, as members of the Bank of England’s Monetary Policy Committee (MPC) appeared before parliament’s Treasury Committee.
Standard of living are under severe strain around the world this year as a result of record inflation, particularly in food and energy prices, but Dr. Dhingra believes Britain will suffer the most as a direct result of leaving the EU.
“It’s undeniable now that we’re seeing a much larger slowdown in trade in the UK compared to the rest of the world,” said Dr. Dhingra, an associate professor at the London School of Economics (LSE).
She stated that British households’ food shopping expenses had risen 6% higher than in other countries in recent years, citing LSE students’ research on the impact of the UK’s poorer trading terms since Brexit.
She added: “The simple way of thinking about what Brexit has done to the economy is that in the period after the referendum, there was the biggest depreciation that any of the world’s four major economies have seen overnight.
“That contributed to increasing prices and reduced wages … we think that number is about 2.6 per cent below the trend that real wages otherwise would have been on.”
According to Bank of England Governor Andrew Bailey, the UK economy is recovering far more slowly from the shock of the Covid-19 pandemic than the eurozone and the US.
Despite this, he stated that the effects of Brexit had not been surprising thus far, and he reiterated the bank’s long-standing estimate that UK productivity would fall by around 3% in the long run.
“As a public official, I’m neutral on Brexit in general, but I’m not neutral in saying that these are the most likely economic consequences.”
The bank governor’s appearance before the Treasury Committee comes just days after a former MPC member stated that Brexit has “permanently harmed” the UK economy.