No-deal Brexit would cost millions of families £500 a year, claims report

Martin Coulter
Low-income families could be hit the hardest by a 'no-deal' Brexit: AFP/Getty Images

A no-deal Brexit would leave millions of British families £500 a year worse off, according to a major new study.

The Resolution Foundation, an independent think tank, says the prices of dairy, meat and clothing products would soar if Theresa May fails to strike a deal with the European Union.

The report, undertaken by academics at Sussex University, claims that around three million families would be £500 a year worse off, while the average household would suffer an annual £260 loss.

It claims that reverting to World Trade Organisation tariffs would see the average price of dairy products rising by 8.1 per cent, meat by 5.8 per cent, and vehicles by 5.5 per cent.

Shadow chancellor John McDonnell was quizzed by host Andrew Marr on Brexit. (PA)

It also suggests that the cost of importing dairy products would rise by 45 per cent, meat by 37 per cent, and beverages, clothing and tobacco by around 10 per cent.

The findings were published just hours after Mrs May met with European Commission President Jean-Claude Juncker in an attempt to drive the so-far stunted negotiations forward.

The pair issued a joint statement, stressing their commitment to finding common ground and claiming their working dinner had been "constructive and friendly".

The Prime Minister has repeatedly claimed that no deal would be "better than a bad deal", and last week began publishing reports detailing how UK customs and trade policy would work without an agreement.

Prime Minister Theresa May is greeted by European Commission President Jean-Claude Juncker while leaving the European Commission headquarters (REUTERS)

The Foundation's new study disputes the Government's optimism, calling a no-deal scenario the "worst possible outcome".

The EU has vowed to avoid trade talks until "sufficient progress" has been made on the UK's financial settlement or "divorce bill", future citizens' rights and the Irish border.

On Sunday, Labour Shadow Chancellor John McDonnell told Andrew Marr the Government must "come to its senses and negotiate properly".

He said: "I don't believe there's a majority in the House of Commons for a no-deal and I think the Government needs to recognise that."