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Brexit inflation already costing over £400 per household

Shadow chancellor John McDonnell being interviewed by Andrew Marr has said talks should take place about Northern Ireland remaining in the customs union.

A CUSTOMS union across the island of Ireland must remain for the good of the economy, shadow chancellor John McDonnell has said, as the most recent evidence shows that plans to leave the EU are already costing households in Northern Ireland more than £400 a year.

Mr McDonnell said that "discussions should be had" about preserving an open union between the North and South.

Speaking on the BBCs Andrew Marr Show, the shadow chancellor said: "Bringing back a hard border I think would be a nightmare.

"We have to have a relationship which is as close to the customs union.

"I would not want to see anything that undermines the peace process in particular and all the gains that we have had."

When pushed on whether there should be a "unique arrangement" over a customs union between the north and south, he said: "I think that's part of the discussions that need to take place".

Mr McDonnell is the latest high profile figure to back special arrangements for Northern Ireland when Britain leaves the EU in March 2019.

It comes as Allied Irish Bank (AIB) have released the latest Brexit Sentiment Index which shows 41 per cent of small to medium employers (SMEs) in Northern Ireland are already feeling a negative economic impact.

Only nine per cent of SMEs in Northern Ireland have reported a positive financial impact from Brexit.

The resulting economic uncertainly means that 31 per cent of small businesses surveyed in Northern Ireland have said they are reviewing, postponing or cancelling plans to expand

It comes as new evidence has shown that the average household is paying over £400 a year, due to higher inflation and the reduced growth of real wages.

The Centre for Economic Performance (CEP) has found households at all income levels have experienced higher inflation because of the referendum.

The latest CEP study has shown that the price increases on everyday items adds up to a cut in annual income for the average worker of around one week's wages per year.

Among the items worst hit by an inflationary hike are bread, cereals, milk, cheese, eggs, tea, beer and wine.

In the immediate aftermath of the referendum the pound depreciated by around ten per cent, raising inflation by increasing the cost of importing goods.

Aggregate inflation increased by 1.7 per cent in the year following the referendum, this indicated that the vote has cost the average household around £7.74 a week or £404 a year.

The CEP study found that Northern Ireland has been the worst hit by inflation, this is thought to be because of the currency fluctuation benefitting businesses in the Republic importing goods.

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