Just in time for Christmas, the drumbeat of Brexit economic bad news rolls on. Today’s figures from the Office for National Statistics shows inflation has risen to a near six-year high at an eye-watering 3.1 per cent. This means everything from food, to fuel, to transport, to clothing is becoming more and more expensive. The ONS doesn’t beat around the bush about why inflation is soaring: the main reason is quite clearly the collapse in the value of the pound since the Brexit vote last year. And with average wage growth running well below the rate of inflation, real wages will continue to fall meaning less money in your pocket at the end of each month.
The individual breakdown in price rises reveals some startling statistics: bread is 5.3 per cent more expensive than this time last year, whilst the price of butter is up by over 21 per cent. Fresh fish is up over 11 per cent, whilst coffee is over 10 per cent. Overall, on average, food and non-alcoholic drink prices have risen by 4.2 per cent over the last 12 months. Everyone’s Christmas dinner just got a lot more expensive.
The Governor of the Bank of England, Mark Carney, will now have to write to the Chancellor explaining exactly why the rate of inflation is so much higher than the Bank’s target of 2 per cent. I don’t think that letter needs to be very long. In fact, one word would suffice: Brexit. There’s no avoiding the basic facts of all this, many of which have only come to light since the referendum. Brexit is making us all worse off and the economic pain looks set to continue for years into the future if we don’t change course soon. It has, don’t forget, also resulted in interest rates rising on mortgages.
The real tragedy, of course, is that the economic damage being wreaked by Brexit will fall largely on the shoulders of those least able to bear the strain. Families struggling to make each month’s budget stretch just that little bit further, people in insecure employment living payday to payday, and pensioners who need fuel for heating over the cold winter months. For these people, the promised sunlit uplands of Brexit promised by the Leave campaign look increasingly like a mirage.
Brexit is wrapped firmly around our economy and our living standards, squeezing the life out of both. And a new report out today shows how destructive the current path of hard Brexit will be for generations to come. It calculates that pretty much every Brexit scenario leaves the UK worse-off, with a no-deal Brexit being the worst outcome of all. That would cost the UK economy 5 per cent of GDP over the next ten years, meaning a loss of £105bn. The report also makes it crystal clear that none of Liam Fox’s fantasy international trade deals will be anywhere near valuable enough to compensate for the loss of leaving the single market and the customs union.
The good news is, we haven’t been driven off the cliff yet but as the Prime Minister said yesterday “nothing is agreed until everything is agreed”. So, as new facts come to light, and as the economic and social consequences of Brexit become clearer, we all have the right to keep an open mind about whether this is really the right path for the country.
Ian Murray is a leading supporter of the pro-European Open Britain campaign.