Brexit tipped to help UK beat EU on cost of living crisis

Walker: Pro-Europeans 'constantly trying' to undermine Brexit

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Institute of Economic Affairs fellow Julian Jessop told that the EU will be harder hit by the approaching cost of living crisis than the UK. He argued that this disparity is indirectly a result of the independence the UK has enjoyed as a result of Brexit.

The cost of living crisis is largely a result of soaring inflation – with the UK and the EU both sitting at around five percent inflation – a 30-year-high for the UK.

However, the pound rose above €1.20 for the first time in almost two years this month, indicating that the UK’s economy may be in a stronger position.

Mr Jessop argues that because the UK will emerge from the Coronavirus pandemic sooner, Britain’s economy will have a head start on the recovery process – something that is indirectly a consequence of Brexit.

He stated: “Firstly, we lifted the lockdown earlier in the summer than other countries do, which allowed us to build up a bit of herd immunity.

“That was a national decision – nothing to do with Brexit.

“But, the second thing was the fact that we rolled the vaccines out much more quickly.”

You can argue whether or not that was part of Brexit. In principle, a member of the EU could have broken away from the EU’s procurement programme for the vaccines and done its own thing.

“But it’s no coincidence that the only country that did break away from the EU’s procurement programme was Brexit Britain.

“Politically, the fact that we didn’t feel the need to follow what other European countries were doing was very important.”

When the UK began its vaccine rollout in February last year, it was heralded as the fastest rollout of any large nation in the world – beaten only by Israel and the United Arab Emirates.

Mr Jessop argues that as a result, the UK may not suffer from the cost of living crisis to the extent that other doomsaying economists predict.

Being able to lower lockdown measures encourages people to go out and spend, driving the economy forward.

“On average, real wages will probably fall for a short period, but don’t forget that this is after a year where, on average, they’ve been rising quite strongly.

“So it will be a bit of a squeeze after a bit of a boom, and that’s not a game-changer for the economy.”

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Mr Jessop was also optimistic about how the UK government will respond to the cost of living crisis.

“When you’re making your predictions, you have to account for the fact that the government is taking cost of living seriously and is going to make changes to account for it. More pessimistic economists tend not to do that.

“Broadly speaking, the big picture is that the government will pass some of the burden on the general taxpayer to ease the burden on low-income households.”

“They’ve already done some things to help low-income households like raising the national minimum wage well above inflation, and the Universal Credit taper.”

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