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Britain’s poorest families will be the biggest winners from Brexit

Date: 03 09 2017

Britain’s poorest families will be the biggest winners from Brexit

– Experts across political spectrum warns ‘Soft Brexit’ will not work
 
– Britain’s poorest families £44 a week better off because of Brexit
 
– Government is urged to adopt a ‘New Model Economy’ 
 
Britain’s poorest families will be the biggest gainers from Brexit, according to a new report from a team of leading economists and businessmen from across the political spectrum.
 
People at the bottom of the earnings league will gain proportionately more from two key benefits of Britain quitting the EU after March 2019 – a reduction in food prices and the restoration of national control over immigration from the EU.
 
The report, drawn up by experts from Labour Leave, Economists for Free Trade, and Leave Means Leave, estimates that families on 60 per cent of median income (£26,000 pa) – commonly accepted as the poverty line – will gain £44 a week from Brexit or £2,288 a year, which is 15 per cent of their weekly spend.
 
The uplift comes because low-income families spend a disproportionately large amount of their income on food and housing. Leaving the EU is estimated to save them £27 a week in lower grocery prices and a drop in rents triggered by a fall in the value of land. On top of that, once Britain is outside the EU, wages for the poor are expected to rise £12 a week because of a fall in income-suppressing low-skilled immigration and because of a reduction of £5 a week in costs of migrant benefits.
 
The report, New Model Economy for a Post-Brexit Britain, also mounts a direct challenge to politicians pushing for a ‘Soft Brexit’ featuring a lengthy transition period in which Britain remains subject to EU single market rules, free movement of labour, and continuing payments to the Brussels budget.
 
It urges the Government to signal a clean break with the EU by adopting a ‘New Model Economy’ characterised by global free trade, deregulation, managed migration, abolition of the Common Agricultural Policy (CAP), repatriation of fisheries, an end to the net £11 billion a year paid to the EU, and a competitive currency.
 
The report declares: “We believe the Government should adopt the ‘New Model Economy’ and prepare now to implement it immediately after Brexit. The Government should also signal now that it is minded to do so, thereby creating certainty and business confidence, leading to investment.
 
“The signalling of the “New Model Economy” will, in addition, have the effect of improving the UK’s negotiating position with the EU and the added benefit of reducing the need for any transitional arrangements.
 
“The alternative model of ‘Soft Brexit’ would merely leave us worse off and in danger of remaining in the EU in all but name.”
 
The authors, representing the major groups campaigning for a clean break with the EU and a new direction for the UK economy, point out that the poorest stand to gain most from Brexit.
 
“The reduction in prices and immigration control are particularly important for lower income households,” the report says.
 
“These households spend more on food and housing, the prices of both of which are raised substantially by EU protectionism. Unskilled immigrants settle in poor communities which therefore carry a disproportionate cost in public services as well as suffering from a fall in wages.. Our estimates show that the lowest decile household would gain £36 a week from Brexit; the second lowest decile (60 per cent of the median) would gain £44 a week.”
 
The report also finds that there will be gains to developing countries from the UK’s free trade policies.
 
John Mills, Chairman of Labour Leave, commented:
 
“In the referendum, the votes of working class Labour supporters were critical to the success of the Brexit campaign. This expert report demonstrates that they were right to back quitting the EU because, this way, they will see a boost to incomes that have been heavily depressed over the last decade.”
 
The report argues that the EU is holding Britain back, not least because of its protectionist nature, and that Brexit provides an opportunity for economic success for the UK.
 
Brexit will transform the “sluggish” economic environment into one of “renewed growth” in the long term, adding 7 per cent to UK GDP as result of free trade (an extra 4 per cent), better regulation (2 per cent), ending the taxpayer subsidy to unskilled EU immigrants (0.2 per cent) and concluding EU budget contributions (0.6 per cent). The overall GDP boost is estimated by EFT as £135 billion a year.
 
The report is scathing about ‘Soft Brexit’, saying the so-called “cliff edge” exit is a myth and a long transition period would merely defer the gains of Brexit. It accuses advocates of a ‘Soft Brexit’ of wanting to remain in the EU in all but name.
 
“These ‘Soft Brexit’ ideas include the proposal for a several-year ‘transition period’ in which nothing would change: all this does is postpone the gains we make by leaving. More importantly, this is most likely a deliberate attempt to frustrate the existing democratic will for Brexit by deferring it in the hope that a fresh referendum can be called or an election result produced that can negate it. It is justified as ‘avoiding a cliff-edge’ for business. But there is no such ‘cliff-edge’, only a change to a more prosperous environment.
 
“Far from being a ‘cliff edge’, March 2019 is a springboard to growth and prosperity.
 
“‘Soft Brexit’ ideas also include proposals to modify our independent settings of trade, regulation and immigration policy in order not to ‘offend the EU’; some politicians have ‘assured’ the French we will continue to play by EU rules even when we have left.
 
“Why so? To do that would be to throw away the very gains from Brexit enumerated above. The EU will be free to adjust to our new policies, as it likes: it could follow free trade, more liberal regulation and more sensible immigration policies itself. This would be a healthy reaction and good for the world economy.”