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No Brexit dividend for low-income households

A ‘No-Deal’ Brexit scenario could cost families already trapped in poverty an extra £480 a year in living costs, according to new research by the Joseph Rowntree Foundation.

The analysis looks at the potential impacts on the cost of living, wages, and employment looking ahead to 2030 based on a number of possible Brexit outcomes, including a ‘Norway’ style agreement with the EU and crashing out altogether with a ‘No-Deal’ scenario.

The report concludes that in all scenarios, the cost of living is likely to rise and real wages to fall after the UK leaves the EU in the immediate period.

It predicts the overall cost of living will rise for low-income households by between £130 (Norway) to £480 (No Deal) per year.

It also warns that workers earning £12 per hour will see real wages fall to £11.90 under a ‘No Deal’ Brexit scenario, while those earning £8 per hour will see it fall to £7.90.

The report adds that the decline in the pound’s value since the EU referendum in 2016 has already cost the average UK household more than £400 in extra living costs.

It also warns the driving forces of poverty will not be addressed by Brexit, and calls for urgent action to tackle this growing problem.

In particular, the JRF has called on the Government to build 80,000 affordable homes a year at Living Rents and to deliver the Shared Prosperity Fund promised to left-behind town and cities, to create more and better jobs with repatriated EU funding.

‘Many people on low incomes backed Leave after being locked out and left behind for too long,’ said JRF chief executive, Campbell Robb.

‘Since the vote to leave the EU, families have been hit by price rises in the shops, seen their wages eaten up by crippling housing costs and had their tax credits pared back.

‘It’s hard to take control and build a better life when you’re juggling the bills and high costs are pulling you under,’ added Mr Robb.

‘Two years on from the vote, this is unacceptable. And it will not change unless the Government gets a grip and delivers for people on low incomes. We need a bold package of domestic reforms, not just favourable trade terms.

‘The Government must fix this and right the wrong of in-work poverty. At the last General Election, low income voters made it clear they wanted more than Brexit delivered, demanding action on living standards too. Failing to meet their expectations of a better life after Brexit would be costly for the political parties. And it would mean millions of families being let down – and seeing no Brexit dividend.’

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