CEP BREXIT Analysis
Who Bears the Pain? How the costs of Brexit would be distributed across income groups
Holger Breinlich, Swati Dhingra, Thomas Sampson and John Van Reenen June 2016
Paper No' CEPBREXIT07:
Press Release - Thursday 2nd June 2016
Squeezing the poor, not just the rich: The costs of Brexit would be evenly distributed across people of all UK income levels
The economic pain of Brexit would be widely shared, with the middle classes being only slightly harder hit than the richest and poorest. Households on average incomes would face losses of at least 4% of their income (£1,637 per year) if the UK left the European Union (EU) and traded as a regular member of the World Trade Organization, compared with remaining in the EU. This is because prices rise across the board, particularly for transport, alcohol, food and clothing.
These are among the findings of the latest in a series of #CEPBrexit reports, published by the Centre for Economic Performance (CEP) at the London School of Economics. The CEP report analyses the distributional effects of leaving the European Union (EU) across different income groups and types of households. It shows that:
CEP director Professor John Van Reenen comments:
"Some supporters of Brexit argue that the economic costs would only be borne by the elite and that most of the population, especially those on lower incomes, would be better off. This claim is plain wrong: our research shows that the pain would be evenly shared across the income distribution. Every group would lose by broadly similar proportions, though those in the middle would lose slightly more than others."
Professor Gianmarco Ottaviano says:
"Brexit would not deliver on its Robin Hood promise of robbing from the rich and giving to the poor. The idea that leaving the EU would help in reducing inequality is simply not borne out by the evidence."
Professor Holger Breinlich adds:
"A UK exit from the EU would lead to significant price increases that would hurt people across the income distribution. If the UK also leaves the European Economic Association as currently suggested by the Leave campaign, the resulting long-run income losses might well reach several thousand pounds for the average household."
Professor Swati Dhingra notes:
"Food prices would rise by 3% to 5% if the UK were to leave the EU. So Brexit won't just make a European holiday more expensive. It will tighten the budgets of households of all incomes."
For further information, contact:Holger Breinlich, Email: Holger.Breinlich@nottingham.ac.uk
Swati Dhingra on +44 (0)20 7955 7804, Email: email@example.com
Gianmarco Ottaviano, Email: firstname.lastname@example.org
Thomas Sampson on +44 (0)20 7955 7408, Email: email@example.com
John Van Reenen on +44(0)7803 614137 / +44 (0)20 7955 7049, Email: firstname.lastname@example.org
Helen Durrant on +44 (0)20 7955 7395; Email: email@example.com
Romesh Vaitilingam on +44(0)7768 661095, Email: firstname.lastname@example.org
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