Will getting rid of EU tariffs help the worst off?

27 October 2017
What was claimed

Food, clothing and footwear make up the highest proportion of the poorest households’ spending.

Our verdict

What makes up the biggest chunk depends on how you categorise people’s weekly spending. These items combined make up about a quarter of the poorest households’ spending.

What was claimed

When the UK leaves the EU, we can set our own tariffs.

Our verdict

Correct, although we won’t have a completely free hand to set what we want due to World Trade Organisation rules.

What was claimed

Getting rid of EU customs union tariffs when we leave will help the worst off.

Our verdict

If we set lower tariffs this may bring down costs for lowest-earning households, but tariffs are just one part of a bigger economic picture.

“When we leave, we can set our own tariffs. Tariffs set at the European level make food, clothing and footwear more expensive. They are the highest proportion of the poorest in society’s expenditure. If we can get rid of those tariffs, we help the worst off in society.”

Jacob Rees-Mogg, 26 October 2017

It’s correct that, after leaving the EU customs union, the UK would be able to choose what tariffs—which are basically taxes on imports or exports—it puts on imports from other countries. The UK wouldn’t have a completely free hand to do this, however.

At the moment, the UK can’t do this because the EU sets a Common External Tariff on anyone it doesn't have a trade deal with.

Higher tariffs mean products can be more expensive after they’ve been imported.

The EU sets relatively high import tariffs on agricultural products compared to everything else. The average EU tariff on agriculture was roughly 11% in 2016, compared to about 4% for other products.

Tariffs on dairy products are as high as 36% on average, those on clothing can average just under 12%, and those on footwear face about 4%.

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The lowest-earning households spend a lot of their money on food and clothes

Mr Rees-Mogg also claims food, drink and clothing make up the highest proportion of the poorest households’ spending.

What makes up the biggest chunk depends on how you categorise different kinds of spending, but these items certainly make up a big part of what low earners spend each week. The latest figures for these are for 2015/16, from the Office for National Statistics.

The lowest-earning 10% of households spend about 17% of their weekly income on food and non-alcoholic drinks. Another 4.5% goes on clothes and 4% goes on alcohol. Meanwhile a full 22% goes on housing and fuel.

The highest-earning 10% are very different. They spend 7.5% on food and drink, 4% on clothes and 1.5% on alcohol. Their biggest items are transport (16%) and leisure (13.5%).

So does this mean getting rid of tariffs will help the worst off?

It’s likely that lower tariffs will help with the cost of certain products, but it’s also just one part of a bigger picture. Tariffs aren’t the only thing that will affect household incomes after Brexit.

The value of the pound has fallen since the referendum, and that has increased pressure on food and drink prices for everyone.

Despite previous inaccurate predictions (covered above), economists generally expect there to be a negative impact on the UK’s economic growth in the coming years as a result of leaving the EU. If that happens household incomes will be lower than they otherwise would have been.

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