Leave to exit: how your money might be affected by Brexit

The dizzying numbers flying around in this referendum seem to allow both sides of the EU debate to claim we’d be far richer or far poorer if we choose to leave or agree to remain.

Although both sides have made claims about the wealth of the country as a whole, Leave campaigners have said less about how voting with them would make individual households richer. Instead, they have mostly reacted to and rejected arguments from the Remain campaigners, who believe that a vote to leave would make us all poorer.

But Brexiteers have made some specific claims about how leaving could make a big difference to households’ personal finances, so we’ve taken a look at whether these stand up to close scrutiny.

Vote Leave, the official campaign, claims that energy regulations handed down by the European Union add millions to the cost of generating energy and that drives up prices for UK households and businesses. It claims that getting out of the EU would allow the UK to cut prices, which would be particularly important for low-income homes living in fuel poverty.

There are several strands to this argument, including that the Lisbon Treaty is being used to force the closure of coal-fired power stations in the UK, and that EU state-aid rules are behind the delay in building Hinkley Point power station. What’s more, the campaign says that proposed EU rules regarding the sharing of gas between member states means that there could be a gas crisis in the UK as a result. However, the other side claim that energy bills will rocket if the UK does leave, so it’s easy to be confused. What do we actually know?

It’s certainly true that energy bills are high in the UK, – indeed, official figures show that our domestic energy prices are among the highest in Europe. One oft-cited reason for these high prices is green energy targets, but the UK has its own domestic targets that would need to be ditched in order for prices to fall, which could be a very unpopular move with environmentally minded voters.

The Vote Leave campaign argues that VAT on household energy use is 5 per cent and can’t be reduced because of EU rules. Brexit would therefore save homes an average of £64 a year on energy, assuming the Government then stopped taxing domestic fuel.

It is true that VAT on fuel can’t be cut under EU rules. Of course, it’s impossible to predict the economic situation after a vote to leave, which means the likelihood of a post-Brexit tax cut is impossible to predict too.

Trade deals may seem very distant from personal finances and household spending, but if agreements were not secured it would have a direct effect on incomes and consumer choice. Vote Leave is adamant that the UK would still be able to trade via a new relationship, citing countries as distant as Australia that have mutual recognition agreements with the UK.

Leave claims that trade with the rest of the world could increase following a Brexit vote. One campaign leaflet reads: “After we retake control, we will negotiate new agreements with countries like India, which represent the future of global growth, much faster than the EU slowcoach wants to or is able to.”

There is particularly wild disagreement about what might happen to trade deals if Britain left the EU. Some independent think-tanks and economists believe new deals would quickly be formed; others believe it could take years to negotiate with all 28 member states.

The Leave.EU campaign claims that UK consumers get a particularly bad deal out of the EU’s Common Agricultural Policy (CAP), which “effectively adds around £400 a year to each family’s living costs”.

However, many agriculturalists say this is essential to support UK farms too. The Worshipful Company of Farmers has expressed concern that a British version of the CAP payments to UK farmers would not continue at the same rates and there would be no guarantee it might continue.

As for the £400 claim, its report on the consequences of Brexit for agriculture comments: “There will be more customs controls, and thus higher trading costs, than now on trade with the EU (both ways). These could depress UK farm prices and raise some consumer costs.”

This did not actually come from the Leave camp but was mentioned, surprisingly, by Lord Rose, the head of the Britain Stronger In Europe campaign, in comments to MPs.

He has been extensively quoted by team Leave following his comment: “If you are short of labour the price will, frankly, go up. So, yes.” Some of the context of his comments was ignored: the former head of business added “that’s not necessarily a good thing”, before elaborating on the long-term employment benefits of membership. But how accurate was his initial statement?

Last year, a report from the Bank of England supported his comment, suggesting that the wages of low-paid employees in catering, hospitality and care have been driven down by increased competition from EU workers.

However, the Centre for Economic Performance at the London School of Economics, claimed that areas of the UK with large recent increases in EU immigration did not suffer greater falls in pay as a result, but that wages fell as a result of the global financial crisis. It added: “Immigrants consume goods and services and this increased demand helps to create more employment opportunities.”

More recently, Lord Rose has clarified that his comments were misunderstood and argued that wages would fall following Brexit because the country would plunge into recession.

Vote Leave claims that EU membership costs the UK more than £350m a week, or nearly £20bn a year. According to campaigners, the Government has sent more than £500m to the EU since 1973.

The UK’s current policy of austerity means that such hefty financial claims resonate with British households who are feeling the pinch of cuts to services and benefits, and rising taxes. However, it’s a figure that’s very much disputed.

Sir Andrew Dilnot, chair of the UK Statistics Authority has publicly chastised campaigners for using the £350m figure, calling it misleading because it fails to take into account the UK’s rebate or the money that comes back from the EU via funding.

Despite his comments, pro-Brexit spokespeople have continued to make the claim and to suggest the full amount could be spent funding important UK institutions such as the NHS instead.

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