Prices, property, pensions: 30 EU referendum questions answered
Will the nation’s decision on 23 June make you richer or poorer? We address the key consumer concerns
Will food prices go up or down if we vote to leave the EU?
David Cameron says families would face increased food bills of more than £220 a year if Britain left because so much of our food is imported from the single market. His claims are based on a belief that the pound would fall in value by 12%, making imports more expensive.
But critics say food prices would fall as Britain would be able to buy its groceries from anywhere in the world without EU duties. Currently food from outside the single market faces an average duty of 12.2%, but it can be as high as 70%-90% for different types of meat, according to the National Farmers’ Union.
If Britain exited, rules agreed with the World Trade Organisation (WTO) would prevent us from setting import tariffs higher than the current default rates, but we would be free to cut them as much as we liked. The results would be likely to be very uneven. For example, we import 12% of our chickens from Thailand and Brazil, but the duty on them is zero.
The in campaign says: “The former bosses of Tesco, Sainsbury’s and Marks & Spencer, and the current chairman of John Lewis, have said shop prices would be likely to rise. This would happen partly because the fall in the pound would make imports more expensive, and partly because of more restrictions on trade with the EU.”
The out campaign says: “The CAP and the common fisheries policy both increase food bills for consumers, devastate the environment and damage African agriculture by imposing punitive tariffs against less developed countries.”
Will I be able to buy beef cheaper from, say, America or Argentina?
The wholesale price of beef in the US is currently about 40% less than in the EU, and can be even lower in parts of South America. Brexit is likely to see supermarkets dump Irish beef in favour of meat from Brazil or Argentina, with steak prices possibly dropping heavily, according to some industry sources. Quality fillet steak could fall in price from around £35/kg to below £30/kg.
Sign up to our EU referendum morning briefing
Get a regular rundown of the debates, the polls and all the latest from the campaign trail ahead of the UK’s referendum on EU membership
But before “les rosbifs” get too excited about a new era of cheap meat, there are other considerations. We may not want to import cheap food such as US beef injected with hormones, which is banned by the EU. The domestic UK beef industry would also be under such threat from cheap imports that complete tariff reduction is unlikely.
In says: “In the longer term rules for imports from non-EU countries would depend on the trade relationship a post-Brexit UK had with them. This would have to be negotiated … The director general of the WTO has said the whole process might take decades.”
Out says: “The independent House of Commons library has concluded that EU membership increases the costs of consumer goods, stating that its common agricultural policy ‘artificially inflates food prices’.”
Will French wine become pricier, and Australian wine cheaper?
Not really. French wine is unlikely to go up in price, but wine from outside the EU may become a shade cheaper – it is subject to complex tariffs, but these work out at little more than 20p a bottle.
Whisky and vodka from outside the EU are not subject to EU tariffs (although there’s a bit on rum) so again expect no price differences. But the Scotch Whisky Association is concerned about Brexit. Scotch represents 10% of all Scottish exports to the EU, with France its second biggest export market in the world. “The EU’s single market, including its regulation of food and drink, and its single trade policy, are central to Scotch whisky’s success,” says David Frost of the SWA.
In says: “The likely fall in sterling would make all imports more expensive.”
Out says: “Both will be cheap! After we vote to leave Britain will be able to negotiate free trade deals with both the EU and countries outside it.”
Will cheap flights to Barcelona and Berlin disappear?
Ryanair’s boss, Michael O’Leary, is the loudest voice among the budget airlines campaigning for Britain to stay in the EU. “If Britain leaves the single market, Britain may be forced out of the open skies regime, and air fares and the cost of holidays will rise,” he says.
At easyJet, the chief executive, Carolyn McCall, says the common aviation area created by the EU has kept airlines’ costs low and any new, more restrictive arrangements would push up fares.
But Europe’s third largest budget airline is Norwegian.com, and isn’t in the EU.
In says: “Ryanair boss Michael O’Leary has said that if we leave the EU common aviation regime, ‘airfares and the cost of holidays will rise’.”
Out says: “There is no prospect of holidays becoming more expensive. We could also reintroduce duty free for flights to the EU.”
Will I have to pay more to buy a German car?
Graham Hope, editor of Auto Express, told us there was “little expectation” among experts that buyers would have to pay more for vehicles if the UK left the EU. “The used car market in particular is largely expected to be unaffected. However, new car prices are harder to predict as there is no precedent to compare with, especially for long-term impact.”
Some remain campaigners fear an exit would see Britain’s car industry hit with a 10% tariff on vehicles exported to Europe. However, an article in the Financial Times earlier this month said that as “the EU market has become much less significant for UK exporters in recent years, EU members might have a greater incentive to conclude preferential trade arrangements for the sector”.
In says: “In the short term sterling would likely fall, making imports more expensive. In the longer term the cost of imports would depend on the trade relationship that we negotiated with the EU.”
Out says: “No. We will strike a free trade deal with the EU after we vote leave – it’s more in their interests than ours to have a deal.”
Will fish be cheaper if we exit the common fisheries policy?
There could be an effect on the cost of the cod and haddock etc in supermarkets and fishmongers if we leave, as we would no longer have to comply with the common fisheries policy (CFP), which carves up fish quotas between the member states. Many in the UK fishing industry “appear unanimous that quitting the EU is a necessity”.
A 2009 report published by the Tax Payers’ Alliance claimed that the estimated cost of the CFP was £186 per household per year.
In says: “If we left the EU our fishing industry could face tariffs on exports to the EU, hitting fishing incomes and requiring price rises.”
Out says: “The opening up of British waters to the EU had a devastating effect on the UK’s fishing industry.”
Are there EU tariffs on clothes?
Yes, many clothing items imported to the EU face a tariff of 12%, though there are lots of things where this is lower, such as bras (6.5%), leather belts (5%) and some men’s ties (6.3%). A 2013 report from the independent House of Commons library appeared to conclude that EU membership increased the cost of many consumer goods.
In says: “Yes [there are tariffs] for clothes exported to the EU from outside its customs area.”
Out says: “These tariffs raise the prices of clothes considerably and are unfair to consumers.”
Is VAT an EU thing? Will it go up or down if we leave?
Value added tax was a condition of Britain joining the common market. The leave campaign says quitting the EU would save British households £64 a year, because the government could scrap VAT on domestic fuel.
However, the remain campaign has attacked its opposition’s “fantasy economics” and suggested VAT might have to go up if the UK leaves the EU.
But VAT is changing either way: in April the European commission proposed an overhaul aimed at giving “a degree of freedom” back to member states.
In says: “The UK government sets VAT rates within EU limits. The biggest risk to tax rates is the hit to the public finances that would be caused by leaving the EU – £20bn-£40bn according to the independent Institute for Fiscal Studies.”
Out says: “The government had to go cap in hand to Brussels for permission to lower the 5% VAT rate on tampons. We have gradually lost control of what we can put VAT on and the rate we are allowed to apply.”
I spend about £100 a week on petrol. Should I fear anything about leaving?
Petrol has been one of the in/out debate’s many price battlegrounds. Boris Johnson recently suggested that taking back control of VAT from the EU would substantially reduce the cost of what we pay at the pumps.
In February the AA said that a two-car family who refuelled twice a month would pay £494 more for petrol each year after Brexit, assuming two pretty dramatic things happened: 1) sterling tumbled by as much as 15%-20% and 2) there was a rebound in the price of oil to more than $90. Those are two pretty sizeable “ifs”.
And it’s hard to avoid concluding that the referendum result won’t have a huge direct effect on petrol prices when you bear in mind that what we pay is largely dictated by two very non-EU-related factors: the price of Brent crude oil ($51 a barrel on Tuesday this week) and UK fuel duty.
Fuel duty is 57.95p a litre for both petrol and diesel, and remains the biggest component of the price we pay. Motorists also pay 20% VAT on fuel.
In says: “The AA has said that Brexit could add £494 a year to the annual fuel bill for a two-car family, as the fall in the pound sends petrol prices up.”
Out says: “The EU applies VAT to petrol – if we vote leave we get the power to reduce the rate.”
My lightbulbs are all old-style. Will I be able to continue using them?
Some of us, at least, would like the UK to take control of its lightbulbs again. Photograph: Tuomas Kujansuu/Getty Images
It seems unlikely given that governments around the world have been phasing out old-style lightbulbs, and manufacturers are unlikely to start remaking such bulbs because they couldn’t sell them in the EU.
In says: “These rules are part of the EU single market. If we remain we will continue to have guaranteed full and free access to the single market of 500 million consumers, plus a say over the rules.”
Out says: “We won’t have to worry about the EU enforcing laws on us that we do not want or need.”
Will the new rules on vacuum cleaners not apply if we leave the EU?
There is an EU ban on about 30 kinds of electrical appliances, including vacuum cleaners, kettles, toasters and lawnmowers that use too much energy. Since September 2014 all vacuum cleaners made or imported in the EU must not have motors that exceed 1,600 watts – and that will be cut to 900 watts from September 2017.
In says: “As with lightbulbs, these rules are part of the EU single market.”
Out says: “Outside the EU we will be free to make our own regulations to suit our own businesses, saving them millions of pounds a week.”
What will happen to house prices if we vote to leave?
House prices have moved to the centre of the EU debate, with many predicting declines in prices if Britain leaves the EU, largely because net immigration is likely to fall. Where the camps differ is the extent of house price falls, and whether that’s a good or a bad thing. Will homeowners, fearful of negative equity, vote remain, and will the priced-out be seduced by the dream of cheaper housing into voting leave?
In says: “Independently reviewed Treasury analysis estimates that by 2018 house prices would fall by 10%-18%.”
Out says: “One of the biggest impacts on house prices is the demand for housing, and clearly by having an open border to almost 500 million people this makes it impossible for the government to plan for the number of houses we need. Only by leaving the EU can we control immigration and plan for both the demand for and supply of housing.”
And what will happen to rents?
Like house prices, rents are predicted to fall, or not rise as fast as otherwise, should Britain leave the EU.
Britain’s population will be 1 million less than projected by 2026 if Brexit takes place, according to the Association of Residential Letting Agents (Arla), cutting the demand for buy-to-let properties and taking pressure off rents.
The biggest impact will be felt in London, says ratings agency Moody’s: “Rental inflation would slow down if immigration is curbed [which] could hit landlords’ ability to pay their mortgages on buy-to-let properties if London becomes less attractive to foreign nationals.”
In says: “Because it would hit the economy and public finances and exacerbate skills shortages, developers and construction firms have said that leaving the EU would make it more difficult to build more homes.”
Out says: “Rents will continue to increase unless we tackle the demand as well as the supply of housing, and that means controlling immigration as well as building more homes.”
EU referendum: guide to the UK’s biggest political decision of the century
Britain is facing a huge decision on 23 June. Here are the answers to all your questions – including what to do if you’ll be at Glastonbury
Will it be more difficult to get a mortgage?
Most mortgage rules are home grown, with the Financial Conduct Authority forcing lenders to carry out affordability tests, and the Bank of England framing rules on things such as high-percentage lending. These are not dictated by Brussels so there is unlikely to be a direct impact from an exit.
The Council of Mortgage Lenders says: “If there was a vote to leave the EU it would be a matter for the authorities to decide whether or not to propose changes to UK regulation, but there would be no instant regulatory effect.”
In says: “The chancellor, Bank of England governor Mark Carney and Virgin Money CEO Jayne-Anne Gadhia have all warned that mortgage conditions could tighten because of increased risk and poorer economic conditions.”
Out says: “No. Industry experts have made it clear that leaving the EU is unlikely to affect mortgages.”
Will mortgage rates rise?
The uncertainty caused by a British exit could tighten the money markets and push up interest rates, according to a Treasury analysis. It said average mortgage costs would rocket by £1,000 a year, and could reach £1,500 under its worst case scenario. David Cameron and George Osborne have both warned that a Brexit would push up rates.
But critics argue that in a deflationary global economy interest rate rises are unlikely. On Monday the US Federal Reserve chair, Janet Yellen, said that US interest rate rises might be on hold again thanks to “considerable uncertainty about the economic outlook” – not least the prospect of Brexit.
In says: “Economic experts, including the Bank of England, are clear that leaving Europe will damage the economy, hit the value of the pound, and force interest rates to rise. This could force up mortgage rates.”
Out says: “No. The increased prospect of leaving the EU since the prime minister announced the referendum has had no impact on lending. There is no evidence or credible arguments for why mortgages will rise.”
Will housebuilding suffer?
Probably. Eastern European migrants have been a crucial part of the housebuilding workforce in parts of Britain, while shares in the major housebuilders have sagged at the prospect of an exit.
David Thomas, chief executive of Barratt Developments, says: “We have a significant part of our labour force, particularly within the London market, coming from continental Europe – the free movement of labour in the European market is a positive from our point of view.”
In says: “Housebuilders have said that, because it would hit the economy and the public finances, and exacerbate skills shortages, leaving the EU would make it more difficult to build more homes.”
Out says: “What will change is that we will be able to control our borders and therefore be able to plan for the number of homes we need.”
I have a holiday home in an EU country. Will life be more difficult if we leave?
It certainly won’t be easier. Tax on the sale of a home in France is a punitive 49% to non-EEA citizens, falling to 19% for those inside the EEA. But if post-Brexit Britain remained in the EEA, owners could escape this tax.
Currency movements will have the biggest effect on most overseas homeowners. If sterling falls, those dependent on the pound will see their income shrivel, but those letting a property in euros will see their income rise in sterling terms.
In says: “Spanish prime minister Mariano Rajoy said: ‘Leaving the EU would mean that British citizens would lose their right to move freely, work and do business within the largest economic area, the largest market in the world.’”
Out says: “Life will not be more difficult. Many countries around the world have visa-free access to the EU’s Schengen area without accepting the supremacy of EU law or uncontrolled EU migration. The UK will be in an excellent position to negotiate a similar arrangement.”
Will my car and other insurance payments go up or down if we leave?
In 2012 the EU introduced a gender equality ruling that meant insurers could no longer set prices according to the gender of the buyer. It affected life or critical illness policies, annuities and, most significantly, car insurance.
Car premiums for young men came down dramatically, and went up for young women by as much as £300-£400 a year.
Steven Cameron from Aegon says it would be “highly contentious” for any politician to consider reintroducing gender discrimination. But theoretically insurance businesses would be able to tweak prices to reflect risk more closely.
In says: “If we left the single market insurance firms would be likely to be badly hit, reducing their ability to keep premiums low.”
Out says: “The European court recently demanded that insurance payments for female drivers were increased in a spectacularly unfair judgment. If we vote leave and take back control we can end these unfair judgments and lower the cost of insurance again.”
Will mobile roaming bills shoot back up?
As recently as 2006, O2 customers from the UK were paying almost €6 a minute (£4.20 back then) to make a four-minute call in Spain.
After a series of cuts ordered by the European commission, the maximum extra charge that the phone operators can add to mobile bills when roaming within the EU has fallen to €0.05 (3p) per minute or for accessing 1MB of data. From June 2017 roaming charges are set to be abolished within the EU.
If we exit UK-based telecoms companies would be free to push up prices again.
In says: “If we left UK consumers would no longer be guaranteed to be covered by the EU mobile roaming charge ban.”
Out says: “You will continue to see your bills fall. Roaming charges are falling across the world, not just in the EU.”
Will I still get compensation for long flight delays?
Since 2004 most airlines whose flights start or end in the EU have had to compensate passengers after long delays. Compensation rates are €250-€600 depending on the delay and journey length. Airlines must also provide food and drinks and hotel accommodation if appropriate.
The airlines hate this EU rule, have repeatedly fought it through the courts, and would be likely to halt any payments if they thought they could on the basis that we were no longer part of the EU.
In says: “If we left the EU our right to compensation for flight delays would become uncertain.”
Out says: “Leaving the EU will not affect your rights because European rules are part of British law.”
If we come out, how will that affect my consumer rights?
The UK is generally seen as being ahead of its peers in Europe because of the old Sale of Goods Act, so the worry here is marginal.
In says: “Consumer rights are a mix of UK and EU law, but the EU provides an important floor guaranteeing minimum standards, not only for UK goods and services but for imports from the EU and for services we use when we travel there. If we left, these rights would become uncertain.”
Out says: “Consumer rights are part of British law. Rules that the EU have introduced will continue to apply after we leave unless and until our elected government changes them.”
Will I still be able to use the Ehic scheme if I fall ill in Europe?
The European health insurance card gives you the right to access state-provided healthcare during a temporary stay in another European Economic Area (EEA) country, and Switzerland. It would have to be renegotiated – but the UK has reciprocal arrangements with countries such as Australia, so it’s not impossible.
In says: “If we left the EU our access to the Ehic would become uncertain. We would have to negotiate to be able to continue to use it.”
Out says: “Other non-EU states have the right to use the Ehic and it will be in the interests of the rest of the EU as well as Britain to make sure we continue to offer healthcare to each other’s’ citizens.”
Will food labels still be required to show ingredients and other info?
EU Regulation 1169/2011, which came into force in the UK in December 2014, requires food companies to label food with all manner of information from the country of origin to sell-by dates and alcoholic content. It also requires labels to state whether any one of 14 allergens such as peanuts or sulphites have been used in the manufacturing process.
In says: “Common food labelling laws are part of the EU single market, which gives UK businesses full and free access to 500 million consumers. The rules ensure that food produced and sold across the market is safe for consumers. If we left, the future of these laws in the UK would be uncertain.”
Out says: “Brussels does control most food labelling rules with perverse situations – for example, it’s illegal to claim that water cures dehydration. Nothing will change with regard to consumer rights when we leave the EU because these rules are now part of the British regulatory system.”
Will my rights as a part-time worker, or my maternity leave, be cut?
The issue of workers’ rights enshrined in EU law has become one of the hottest areas of debate – and has led to unions and politicians calling on Brexiters to say which laws, if any, they would scrap following a vote to leave. Accumulated workers’ rights include paid annual leave, time off for antenatal appointments, fair treatment for part-time workers, limits on working times, and better protection for agency and temporary workers. However, these rights may sound hollow if you are part of the growing army of people in low-paid self-employment or on a zero-hours contract.
In says: “EU law guarantees a floor of minimum employment standards and has provided important rights for part-time workers. If we left, these rights would become uncertain. This also applies to shared maternity leave”
Out says: “All your rights will remain untouched if we leave the EU.”
PENSIONS AND INVESTMENTS
Will sterling collapse in value if we exit?
There is almost universal agreement that sterling will fall in value if the country leaves the EU. The debate is by how far and for how long.
Goldman Sachs, a keen supporter of Britain remaining in the EU, said in February that the pound would plunge by up to 15%-20% on exit. Given that £1 currently gets you €1.28, that suggests a drop to little more than €1 for £1. But Pimco, the world’s largest bond fund, predicts the fall will be more like 5%-10%.
In says: “Mark Carney has said market indications are that ‘were the UK to vote to leave the EU, sterling’s exchange rate would fall further, perhaps sharply’. A host of think tank and private sector economists have said they also expect sterling to fall.”
Out says: “Many people who predict doom and gloom in the event of leaving the EU are the same people who said that unless we joined the euro the British economy would suffer. Fluctuations in sterling are driven by many factors, and that will be the case inside or outside the EU.”
I have an investment Isa. Will the value of shares drop if we leave the EU?
The International Monetary Fund says Brexit would cause a stock-market crash and “severe global damage”. The OECD, a club of mostly rich nations, reckons it will send “shockwaves” through the global economy. The effect of Brexit on markets is likely to be immediate and probably painful, but will it cause long-term damage?
Neil Woodford, whose £8bn fund has large stakes in leading British companies such as GlaxoSmithKline, BT and BAE Systems, says much of the debate over British exit is “bogus”. His research indicates that British withdrawal from the EU would have no long-term negative effect on the UK economy and could even benefit it in the short term.
But others are less sanguine. David Coombs at Rathbone Unit Trust Management told Fund Strategy magazine: “We believe Brexit is the biggest macro risk affecting our strategy.”
In says: “UBS Wealth Management has forecast that a vote to leave would wipe 10% off share prices in the next year. Independently reviewed Treasury analysis estimated that share prices would fall by 20%-29% by 2018 if we voted to leave.”
Out says: “Once Britain leaves the EU it will be able to realise its full economic potential rather than being dragged down by the only continent in economic decline.”
I have a cash Isa. What will an exit mean for interest rates on my savings?
The Bank of England may be forced to defend a collapse in sterling by raising interest rates. Or it may cut interest rates and expand its quantitative easing programme to pump money into the economy. Both are plausible outcomes from a British exit from the EU.
Pensions is one area where advisers raise red-tape fears
Higher interest rates will benefit savers who currently struggle to pick up anything more than 1.3% on their cash Isa’s. But they will choke mortgage holders, some of whom may find their mortgages unaffordable.
But interest rate forecasts are notoriously unreliable – not least those from the Bank of England.
In says: “The biggest threat to the value of savings would be the rise in inflation generated by the fall in sterling. Independently reviewed Treasury analysis forecast that a year after a vote to leave, the CPI inflation rate would be 2.3 percentage points higher than if we remain.”
Out says: “There is no reason for rates to move much in either direction.”
Will Brexit shrink my pension?
Leaving the EU could wipe up to £32,000 off the average pensioner’s wealth, George Osborne claims, largely due to his predictions about falls in the stock market.
But the Treasury forecasts are based on an assumption that inflation will be 2.2% in the event of Brexit, significantly higher than the Office for Budget Responsibility’s expectation of 0.6%. “Even if this did happen, pensioners would not be worse off as their pension would rise by at least 2.5% through the triple-lock – they’d just be less better off,” said Tom Selby of investment firm AJ Bell.
Pension expert Tom McPhail at Hargreaves Lansdown says there are likely to be gains and losses. Miserably low annuity rates could move up if interest rates were raised to defend sterling, but if the currency is plunging, the underlying value of people’s pension pots will decline.
In says: “Pension incomes would be hit – by the rise in inflation caused by the weaker pound, and by the lower investment incomes caused by the poorer business and economic environment.”
Out says: “There will be no economic upheaval when we leave. As Lord Rose, who is in charge of the remain campaign, said: ‘It’s not going to be a step change, it’s going to be a gentle process … Nothing is going to happen if we come out of Europe in the first five years, probably.’”
Investor compensation is protected by EU law. If we leave is my money more at risk?
The money in your savings and bank accounts, cash Isas etc is protected up to £75,000 by an EU directive. Given the precarious confidence that savers have in the banks, it is unlikely any government would seek to cut that compensation level, irrespective of remaining or quitting the EU.
In says: “If we leave, EU investor compensation guarantees would become uncertain.”
Out says: “The rights investors enjoy under British law long pre-date our membership of the EU. When we leave the EU investors will continue to enjoy the same protection as they do today.”
I’m a pensioner living in Spain. Will the government stop uprating my pension payment if we leave?
Currently, if you retire to countries across the European Economic Area, or to Gibraltar or Switzerland, then your state pension is up rated every year in line with inflation.
“It is in theory possible that our arrangements with EU countries would come under pressure in the event of a leave vote; however, given the intricate levels of economic and social interdependence between the UK and EU member states, it may not be in anyone’s interests to unwind current arrangements in the short term,” says McPhail.
In says: “Our EU membership guarantees pensions uprating to pensioners living in the EU. If we were outside the single market, pensions uprating would require a bilateral agreement between the UK and the country concerned.”
Out says: “Uprating pensions does not depend on EU membership. Britain has international agreements with countries like the US which mean pensions are uprated.”