A hard Brexit would drive up food prices and increase the overall cost of living for Irish households according to a new report compiled by the ESRI.
According to the document, the cost of living would rise for all households in Ireland by 2% to 3.1% – working out at an annual increase of €892 to €1,360 per household.
It used a number of Brexit scenarios to examine the price increase of a range of imported goods.
Low-income households hit hardest
The ESRI found that lower-income households would be most impacted by this, as these spend a greater share of household expenditure on food products, many of which are imported from the UK and would be subject to tariffs.
The percentage increase faced by the poorest households would be 70% more than the percentage increase faced by the wealthiest households.
The study was commissioned by the Competition and Consumer Protection Commission and examines the shares of imported products from the UK in household spending and estimates effects of a hard Brexit scenario, incorporating tariffs and other increases in costs of trade between the EU and UK.
One of the report’s authors, Martina Lawless, commented: “As Ireland imports a considerable amount of food products from the UK, a hard Brexit could have an immediate impact on the cost of living.
Unfortunately, we find that this impact would likely fall disproportionately on lower-income households.
The report’s estimates do not take into account of switching of products or changes in expenditure patterns in response to the cost increases. For this reason, they are likely to reflect the maximum increase in the cost of living.