A UK business leader has claimed the price of many goods from around the world could fall for British consumers under a no-deal Brexit.
Robert Hardy, former director of P&O Ferries and Eurotunnel Plus and now commercial director of border checks firm Oakland Invicta, also said leaving the EU without a deal could be good for Britain “in the long run.”
He said a no-deal Brexit was like “redecorating your house,” suggesting it will look “an awful lot worse before it gets better.” But he said the UK economy could take five years to bounce back from the damage of a disorderly rupture with the EU.
Giving evidence in front of MPs on parliament’s international trade committee, he said the prices of some imported products could fall as they would avoid EU duties.
Hardy singled out “granola-topped yoghurt” as an example, with an EU duty currently imposed on granola from Israel that could be lower outside the bloc.
Businesses and experts have issued countless warnings since the 2016 referendum that a hard Brexit could have the opposite effect on most imports, with a severe fall in the pound and new tariffs or checks expected to push up import prices.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), told the same hearing it was “quite clear” the average price of a car in the UK would rise £1,500 under Britain’s planed no-deal tariff policies.
The chances of Britain leaving the EU without a deal are widely seen to have increased in recent months, with new Conservative leader Boris Johnson pledging to deliver Brexit “come what may” on 31 October.
Hardy told MPs “the change is what people fear” about the scale of potential upheaval from a no-deal Brexit.
But he added: “Imports from the EU will be relatively easy, though not as easy as they are today. Imports from the rest of world will be easier than they are today, with postponed VAT accounting and lower duty rates.
“It creates an opportunity where a product which currently comes into the EU and becomes part of a product eventually destined for the UK can become cheaper - because the duty rate applied in the EU may be more than duty rate that’s applicable in the UK.
“We use granola-topped yoghurt as an example. The yoghurt comes from France, the granola comes from Israel. The deal we’ve done on granola is better than the EU’s deal. The granola topped yoghurt just became cheaper.”
But Hardy admitted it could come “at the expense” of British export firms, which could be hit by the sudden rupture and new barriers and competition from a no-deal Brexit.
Yahoo Finance UK has previously reported on the risk that some products from the EU could increase in price, as Britain may no longer enjoy tariff-free access.
David Henig, director of the UK Trade Policy Project, has written that there will be “probably little effect on consumer prices overall,” with increases in some costs like cars, but bicycle, cereal and shoe prices likely to fall.
Any gains from lower tariffs may be wiped out entirely if the value of sterling plummets significantly after Brexit, particularly in a chaotic and last-minute no-deal outcome that spooks the markets.
The UK government’s independent budget watchdog warned last week that a no-deal Brexit would be catastrophic for the UK economy, causing a recession, ‘squeeze’ on real incomes and £30bn hole in the public finances as tax receipts dry up and borrowing spirals.