Press Releases

EU Referendum Press Releases : Britain Stronger In Europe – Retail Price Increases if UK Leaves the EU

Below is the text of the press release issued by Britain Stronger In Europe on 21 June 2016.

Former bosses of Tesco, Sainsbury’s, M&S, Asda, Waitrose, Morrisons and B&Q warn that “prices will rise” if Britain leaves the EU.

Research by retail union USDAW finds that, if we were to leave, the hit to sterling and the imposition of tariffs would increase prices for families by £580 a year.

Stronger In analysis shows higher inflation as a result of leaving would cause a hike in rail fares.

Today [Tuesday], in an unprecedented intervention, the bosses of Britain’s biggest retailers, the USDAW trade union, and new research from Britain Stronger In Europe show that leaving the EU would cause prices for essential goods and services to rise, hitting working people and their families in the pocket.

In an open letter, the former bosses of Britain’s retail giants, as well as the USDAW trade union, warn that “prices will rise” if Britain leaves the EU, as the pound would weaken and supply chains would be disrupted. This would be “catastrophic for millions of ordinary families”, they say. They include former Tesco boss Sir Terry Leahy, former Marks and Spencer boss Marc Bolland, and former Sainsbury’s boss Sir Justin King.

It comes as USDAW, the union that represents 425,000 workers in the retail industry, unveils new research showing that workers would be at least £580 a year worse off if Britain leaves the EU, due to a hit to sterling and new tariffs imposed on imported goods like food, drink and clothing. The union’s General Secretary, John Hannett, concludes that: “Brexit will harm the UK economy, leading to fewer jobs, increased pressure on workers’ rights and greater insecurity for Usdaw members.”

Meanwhile, new Stronger In analysis demonstrates yet another crippling cost for working people if Britain leaves the EU – higher rail fares. If inflation was 2.7 percentage points higher, as the Treasury have said it might be if Britain leaves, the price of popular rail season tickets would rocket. A season ticket from Birmingham to London would increase by £270, from Ashford to London by £165, and from Liverpool to Manchester by £80.

Commenting, Alistair Darling, former Chancellor of the Exchequer, said:

“Every credible economic expert is clear – leaving the EU, our biggest market, would hit trade, boost inflation, and increase the price of imports. This would be devastating for working people who cannot afford a rise in the cost of living.

“The economic consequences of leaving Europe could well be worse than the damage done by the Great Recession of 2008. Workers, families and small businesspeople would all be hammered if we leave. The safe choice is to vote to remain in Europe”.

Andrew Adonis, former Secretary of State for Transport, said:

“As the Governor of the Bank of England has made clear, if Britain votes to leave the EU we risk a devaluation of the pound and unnecessary inflation. For millions of British commuters that could mean a ‘Brexit penalty’ of more than £100 a year on rail fares.

“In other words, rail users from across the UK will have to help foot the bill for leaving the EU. For British commuters concerned about prices there is only one sensible course of action this Thursday – say no to the leavers’ price hike and vote for Britain to remain economically secure within the EU.”

Richard Lloyd, Executive Director of Which? from 2011-2016:

“As someone who has spent years at Which? working to get a better deal for consumers, I am now convinced that leaving the EU will give ordinary British families a worse deal for years to come, including higher prices at the pump, higher prices at the till and higher prices on their holidays. My advice to consumers is clear – this could be an expensive mistake, don’t risk it.”

Text of the retailers’ letter:

“We are experienced retailers from Tesco, Sainsbury’s, Marks & Spencer, Asda, Waitrose, Morrisons and B&Q and with USDAW, who represent hundreds of thousands of trade union members, believe that if we leave the European Union prices will rise.

“There are two key reasons for this.

“Firstly, supply chains. We’ve spent the last few decades building very strong supply chains with the EU, which are fully integrated in order to deliver better quality, choice and value for the UK consumer. The single market and free trade are critically important to the strength of the consumer economy. Food is always one of the battle grounds for trade negotiations and the idea that we can reshape supply chains which have taken 45 years to build, in two to three years, is delusional.

“Secondly, the value of the pound. In the past two weeks alone, as worries over leaving Europe have increased, the pound has fallen dramatically. This will push up prices. A ‘Leave’ vote will very likely make this worse and lead to a further rise in prices – such as the cost of filling a petrol tank, and the price of a weekly shop. We strongly believe that a Brexit will see less money in people’s pockets and be catastrophic for millions of ordinary families. That is why we believe that Britain should remain in the EU on 23rd June.”

Marc Bolland, Sir Ian Cheshire, Justin King CBE, Sir Terry Leahy, Andy Clarke, Dalton Philips, Lord Price and John Hannett.

USDAW research:

The report from USDAW, The Impact of Brexit On Consumers, is here:

Stronger In research:

Hundred-pound rail fare rises if we vote to leave.

New analysis has found that voting to leave could mean hundred-pound rises in commuter fares across the country.

The cap on annual rail fare rises is set by inflation, which analysis from the Treasury, the Bank of England, and leading banks has warned, would be driven up by the hit to sterling as a result of leaving.

As recent market turmoil has demonstrated sterling could be heavily impacted by a vote to leave, with some analysts forecasting falls of as much as 30%. That would mean higher prices for imported goods, driving up inflation. This would be passed in full on to commuters for each year inflation was higher as a result of Brexit, with warnings that the effect could last several years.

Example of the possible Brexit-penalty rail fare rises for just one year – based on the conservative estimate sterling would fall by up to 15% include:

Oxford – London: £152
Ashford – London: £165
Gloucester – Birmingham: £104
Liverpool – Manchester: £80
Edinburgh – Berwick: £99

The Governor of the Bank of England has highlighted how there could be “pressure on prices” if we vote to leave. “there can be short term implications for activity in the United Kingdom, and therefore, for pressures on prices… there could be movements in the exchange rate which would push up on inflation.” – Mark Carney, Governor Bank of England, 8 Mar 2016, Treasury Select Committee

HM Treasury have forecast inflation will be 2.3 – 2.7 ppts higher. “In the shock scenario, a vote to leave would result in a recession, a spike in inflation and a rise in unemployment… the analysis shows that the fall in the value of the pound would be around 12%…the exchange-rate-driven increase in the price of imports would lead to a material increase in prices, with the CPI inflation rate higher by 2.3 percentage points after a year…In the severe shock scenario…sterling would depreciate by 15% and CPI inflation would increase by 2.7 percentage points after a year.” – HM Government, HM Treasury analysis: the immediate economic impact of leaving the EU, May 2016, link

Regulated rail fare rises are determined by inflation – so the higher inflation would be completely passed on. Regulated rail fare rises, which cover commuter fares and protected fares like standard returns, are capped at the July RPI inflation figure. As the main differences between CPI and RPI is that RPI also includes housing costs, and it uses an arithmetic mean, which tends to be higher than the geometric mean used to calculate CPI, it is reasonable to assume that the impact on RPI inflation would be similar.

House of Commons Library, Rail fares and ticketing, 3 March 2016, link; ONS, Differences between the RPI and CPI measures of inflation, link

This would mean annual hundred pound rises in commuter season tickets for each year inflation was higher:

Season ticket between

2016 cost

2.3% increase

2.7% increase


London fares



£ 6,116

£ 140.67

£ 165.13



London (High Speed)

£ 5,207

£ 119.76

£ 140.59



London (Standard)

£ 4,221

£ 97.08

£ 113.97




£ 6,152

£ 141.50

£ 166.10




£ 3,914

£ 90.02

£ 105.68



London (Southern rail)

£ 4,452

£ 102.40

£ 120.20




£ 5,620

£ 129.26

£ 151.74




£ 5,012

£ 115.28

£ 135.32


Cheltenham Spa


£ 9,800

£ 225.40

£ 264.60




£ 4,196

£ 96.51

£ 113.29




£ 4,228

£ 97.24

£ 114.16




£ 10,012

£ 230.28

£ 270.32


Other fares



£ 2,960

£ 68.08

£ 79.92




£ 3,860

£ 88.78

£ 104.22




£ 2,032

£ 46.74

£ 54.86




£ 3,656

£ 84.09

£ 98.71




£ 1,600

£ 36.80

£ 43.20




£ 2,044

£ 47.01

£ 55.19




£ 2,064

£ 47.47

£ 55.73




£ 2,324

£ 53.45

£ 62.75




£ 1,480

£ 34.04

£ 39.96




£ 1,852

£ 42.60

£ 50.00




£ 1,988

£ 45.72

£ 53.68




£ 1,796

£ 41.31

£ 48.49




£ 1,512

£ 34.78

£ 40.82




£ 1,208

£ 27.78

£ 32.62




£ 2,840

£ 65.32

£ 76.68




£ 1,608

£ 36.98

£ 43.42




£ 3,176

£ 73.05

£ 85.75




£ 1,844

£ 42.41

£ 49.79


Some analysts have forecast that the rise in inflation could last several years – meaning multiple years of higher fare rises. Citi have said higher inflation could last several years.
Reuters, 5 February 2016, link

This effect on inflation is likely to be an underestimate

Treasury forecasts for the fall in the value of the conservative compared to other forecasts. The Treasury forecast is based on a 12%-15% fall in the pound. This is lower than the estimates of a number of other banks:

Citi has predicted a sterling fall of up to 20%. Citi has predicted that if the UK votes to leave the EU the pound would depreciate significantly, “with sterling’s trade-weighted exchange rate probably retesting the lows after the 2007-09 crisis … 15-20 percent below current levels”, pushing inflation up to 3-4% for several years and possibly causing the Bank of England to hike interest rates.
Reuters, 5 February 2016, link; Financial Times, 8 February 2016, link

HSBC predict that sterling could fall 20% against the dollar. HSBC has said the UK “will need to get beyond Brexit fears” before sterling recovers from the weakness seen in early 2016. If the UK votes to leave the EU, HSBC predicts sterling could fall by 20% against the dollar.
Financial Times, 22 January 2016, link

Goldman Sachs predicts a sterling fall of up to 20%. Goldman Sachs has predicted that sterling could fall by 15-20% if the UK votes to leave the EU, as capital inflows required to finance the capital account deficit dry up.
Financial Times, 4 February 2016, link

And recent forecasts of the hit to sterling say it could be as high as 30%:

Ian Harnett, Chief Investment Strategist, Absolute Strategy Research: “The downside risk is probably 30% to sterling and another 20% to equities”
Guardian, 11 June 2016, link

Iain Clark, Efficient Frontier Consulting & Saeed Amen, Thalesians: “Much of the debate around a potential British exit (Brexit) from the EU has centered on the potential macroeconomic impact. In this paper, we instead focus on understanding market expectations for price action around the Brexit referendum date. Extracting implied distributions from the GBPUSD option volatility surface, we estimate that the market expects a vote to leave could result in a move in GBPUSD from 1.4390 (spot reference on 10 June 2016) down to a range in 1.10 to 1.30, i.e. a 10-25% decline”
Implied Distributions from GBPUSD Risk-Reversals and Implication for Brexit Scenarios, 13 June 2016, link

Alvin T. Tan, Societe Generale: “The market for sterling and sterling protection is being led by the nose by the opinion polls.’ If the UK votes to leave, he forecast the pound will drop to $1.30 within two weeks and $1.20 in the longer term.”
Bloomberg, 15 June 2016, link

Yann Quelenn, Swissquote Bank: “In the event that the polls provide strong indication that the UK is heading for the Brexit door, the pound sterling will resume its free fall and move towards the $1.30.”
15 June 2016, link

It would also be harder to afford the current rail fares policy after the £40 billion cost of leaving. The independent IFS have warned of a £40 billion hole in the public finances if we leave. That would make it harder to afford the pledge made to cap regulated fare rises at RPI. If this was abandoned that would mean even higher fare rises. The IFS said: “The estimates of NIESR for a GDP hit of between 2.1% and 3.5% probably provide a good central range for the likely impact on GDP in 2019. Including the direct benefits of reduced budget contributions, these would lead to the public finances being between about £20 billion and £40 billion less healthy than in a scenario in which we did not leave the EU.”

IFS, Brexit and the UK’s Public Finances, 25 May 2016, p.69

Leave campaigners think the higher prices a lower pound would bring is an acceptable price to pay

Nigel Farage. “Even if sterling were to fall a few percentage points after Brexit, so what?”
Nigel Farage, Marr, 12 June 2016, link

Andrea Leadsom. “The pound goes up and down. It’s a floating currency. So it floats. If it goes down a bit, that is good for our exports. If it goes up a bit, that is good for us going on holiday to Europe. It floats. It is a floating currency. So to say because it goes down or up, that is a disaster, is simply not true. There are winners and losers, and a bit of volatility in advance is likely, but afterwards, people close out their positions and deal with the new reality”
Andrea Leadsom, Murnaghan, 5 June 2016

Jacob Rees Mogg: “Inevitably there will be a level of uncertainty if we leave…This uncertainty could include a fall in the value of the pound, but that is not necessarily a bad thing.”
Mail on Sunday, 29 May 2016, link

Vote Leave Deputy Chairman John Mills runs a campaign to reduce the value of the pound. John Mills set up ‘The £ campaign’ in 2014. The campaign argues that “The UK pound is much too high. We urgently need a more competitive exchange rate”. John Mills is the Chairman and the correspondence address for the campaign is the office of his business JML
The £ Campaign website, link

A Vote Leave press release makes the argument sterling depreciation would be good for the economy.
“The MPC accepts that currency fluctuations could be benefitting the economy. The minutes state that: ‘Sterling has depreciated further over the past month… these movements should support economic activity’”
Vote Leave press release, 14 April 2016, link