Workers’ real wages will be cut by £470 thanks to Brexit, says a damning report
A study by the think tanks Resolution Foundation and the London School of Economics describes some of the outcome of the decision to leave the EU – six years after the historic vote
Boris Johnson’s Brexit deal will result in a £470 cut in workers’ wages in real terms, a report claims today.
A study by think tanks Resolution Foundation and the London School of Economics warns it will take years to assess the impact of the trade and cooperation deal the Prime Minister has signed with Brussels, but the UK will in the next decade will get poorer.
The foundation said: “It will be years before the full impact of the TCA is felt, but this move towards a more closed economy, the authors say, will make the UK less competitive, which in turn will reduce productivity and real wages .
“The study estimates that changes in trade rules alone will reduce labor productivity by 1.3% by the end of the decade.
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“This will contribute to weaker wage growth, with real wages averaging £470 lower per worker each year than they would otherwise have been.”
Britain voted 52%-48% to leave the EU six years ago tomorrow – marching the UK off the bloc 43 years after Britain joined the EC.
But according to the report, the result of the 2016 referendum “triggered a depreciation-driven inflationary spurt, pushing up household living costs and falling business investment.”
According to the 73-page study, the electronics industry and the fishing industry should prepare for production declines in the longer term.
Fishermen should expect a 30% drop, the authors say.
“Detailed modeling shows that one of the most affected sectors of the UK economy will be the manufacturing of electrical goods, which is particularly reliant on cross-border supply chains. In contrast, food product manufacturing will grow post-Brexit as it supplies the UK market,” says the foundation.
“These shifts will add to Britain’s productivity woes as the manufacturing sectors of the economy that are expected to shrink tend to be more productive than those expected to grow – average productivity in shrinking manufacturing sectors is £47 per hour, compared to £37 an hour in growing sectors.”
The report warns that the North East, where support for leaving the EU was higher than the UK as a whole, is likely to be hardest hit by Brexit, given its businesses’ particular reliance on exports to the EU.
East of England, which has a larger share of food producers, is expected to outperform the rest of the country in supplying British dinner plates.
The Resolution Foundation’s chief economist, Sophie Hale, said leaving the EU had “damaged the UK’s competitiveness and openness to trade with a wider range of countries”.
She added: “This will ultimately reduce productivity and also reduce workers’ real wages.
“Some sectors – including fisheries – still face significant changes in the coming years.
“But the broader service-oriented nature of the UK economy will remain largely untouched.
“Some manufacturing sectors, like food manufacturing, will grow, but others will shrink, including advanced manufacturing.
“The latter are generally more productive and pay higher wages than the former, showing how a less open economy affects household living standards.”
Naomi Smith, leader of the Best for Britain campaign group, said: “These warnings of reduced competitiveness, productivity and wages show that the government’s tough Brexit deal has left us worse off and will continue to do so for years, if not decades.
“Failing to act in a livelihood crisis is not just a leadership failure, it is a moral failure.
“Ministers must acknowledge that their deal is not working and return to the negotiating table immediately.”
https://www.mirror.co.uk/news/politics/workers-real-pay-cut-470-27293183 Workers' real wages will be cut by £470 thanks to Brexit, says a damning report