A more distant relationship might be worth the economic risk. If ministers at Chequers are concerned about the wellbeing of the worst off, they should opt for a high-alignment regimeby Marley Morris / July 5, 2018 / Leave a comment
This week’s Cabinet showdown looks to be a decisive moment in the UK’s Brexit debate. As ministers prepare to meet at Chequers to agree the government’s new plans, Prime Minister May is squeezed between the EU’s tough negotiating position and her own government’s red lines on immigration and sovereignty.
The government must now make a decision between two competing visions of Brexit: staying closely aligned to the EU as a means of retaining our trade links, or risking new barriers to trade in order to diverge from EU rules.
For a Prime Minister who began her tenure in Downing Street with a heartfelt call to fight injustice, the impacts of her decision this week on the most vulnerable must be of critical importance.
Indeed, in recent months, both sides of the argument have sought to ground their case in progressive values, on the basis that their preferred post-Brexit settlement would be in the interest of poorer income groups.
“Both sides of the argument have sought to ground their case in progressive values”
Those in favour of a hard Brexit have argued that outside the customs union we would be able to reduce import tariffs on goods from the rest of the world, which would especially benefit low income households.
At the same time, those in favour of a soft Brexit have argued that a ‘no deal’ would weigh most heavily on vulnerable groups, because they are typically more exposed to economic shocks.
IPPR’s new report suggests that both these arguments are overly simplistic. Our analysis finds that Brexit is unlikely to widen the gap between rich and poor.
In fact, more highly-paid sectors are expected to be somewhat worse hit in the short-to-medium term, because of the disproportionate effect on the finance and business sectors (where employees tend to be more highly paid).
But this doesn’t mean that poorer households and regions won’t lose out after Brexit, especially if the UK leaves the EU without a deal in place. In particular, price rises post-Brexit will squeeze spending across households from all income groups.
Moreover, it is misleading to claim that leaving the customs union and then unilaterally reducing all of our import tariffs will benefit the poorest: while it will help to bring down prices, this is highly…