UK households are likely to face the loss of £1,000 a year because of steeper trading costs with European partners, management consultant Oliver Wyman has warned.
Even if the UK is able to agree terms of a trade deal with the EU the country is likely to face a bill of £6.8 billion due to higher border costs and related red tape, it said in a report seen by the BBC. If no deal is agreed the immediate costs would likely spiral to £27 billion, it added.
‘While the outcomes of Brexit remain unclear, our analysis shows that any scenario will increase costs for UK households,’ said Oliver Wyman partner Duncan Brewer.
‘The only question is by how much, which will depend on what deal is negotiated.
‘While businesses will do all they can to absorb rising costs, we expect they will be forced to gradually put up prices for shoppers. If they don't, profits could vanish.’
Cross border friction and higher friction across supply chains would likely add 2.3% to a basket of household goods, the report estimated. For a supermarket booking annual revenue of £10 billion that would already tightly constrained profits being cut by a third.
Longer term, the house suggested that trade costs would add a further 1% to household bills or an average of £250 per household.