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Brexit means cheaper food for Britons

The food industry told us last week that we should be worried about food prices rising after Brexit and given the fall in the value of the pound. Some might consider this wonderful positioning for a bout of profiteering but certainly not a valid proposition. On the contrary: if the government do the right things then food prices will fall after Brexit.

The starting point is the common misconception of the nature of the EU internal market and customs union. Much of the left-leaning and pro-EU media report it as a free trade area that we are about to abandon and to which we must seek “access” , as if there were no means of trading without this. In fact, the EU is a protectionist zone which makes hardworking families in the UK pay far more than they need to for food and consumer goods by imposing tariffs on our imports — as high as 50 per cent on some foodstuffs and 20 per cent on clothing — and prevents us from signing trade arrangements outside the EU.

A group of economists led by Patrick Minford have pointed out that on leaving the EU we could remove all tariffs, dramatically reducing the cost of food, and in so doing we could boost the economy by a massive 4 per cent of GDP — nearly £70 billion. This should be the direction of travel adopted by the government even if we do not want to do this in one go. If we were to gain half a percent each year for eight years it would be a significant boost and would reduce the cost of living for many.

Of course we would need to protect strategic industries, including agriculture, and without EU state aid rules we would be much freer to do so. After all, an independent nation must be sure it can feed and clothe its population, provide energy and transport and the means of producing armaments. There are many foods we cannot produce because of climate or seasonality, or that we simply cannot produce enough of, however. Even if the EU impose tariffs on us we should remove as many as we can, as quickly as we can. Why not import tariff-free oranges from South Africa, vegetables from Africa or bananas from the Caribbean?

Not only would it be a boost for the budget of hardworking families, keep down inflation and help the balance of trade, it would also benefit emerging economies rather than the “fat cat” continental farmers. This would be a much bigger benefit to people around the world than overseas aid — after all, the sustainable route out of poverty is trade not aid, something that the EU scandalously prevents us from pursuing.

Even for those products we choose not to be tariff-free initially, any price increase is unlikely to be fully passed on to the customer from my experience. In a competitive market supermarkets will keep down prices and source the best-value goods.

So have no fear — leaving the EU will lead to cheaper food, clothing and other essentials.

Source: www.thetimes.co.uk - 12 December 2016