A no-deal Brexit could have wide-ranging consequences for Britain.
We already know it will have an effect on a number of aspects of life including travel, the price of goods and the availability of items – however it is worth noting that the true impact of leaving the EU without an agreement will not be known until after the departure date of 29 March 2019.
A no deal could also have an impact on the lives of people who claim benefits or Universal Credit but policy and economy think tanks have yet to analyse the link.
Here are some ways in which people on benefits could be affected:
Cost of living
If the cost of living rises as a result of a no-deal Brexit, everyone in Britain will be impacted. But those on benefits stand to feel the brunt of the increase.
The Bank of England has predicted that inflation will rise significantly in the event of a no-deal Brexit.
In November, the Bank’s governor Mark Carney said a no deal could lead Britain’s gross domestic product – the value of goods and services – to drop by eight per cent in 2019, which could mean unemployment rises to 7.5 per cent and inflation rises to 6.5 per cent.
However, Universal Credit and all equivalent benefits are set to remain frozen in cash terms throughout 2019, with Work and Pensions Secretary Amber Rudd suggesting the freeze is unlikely to lift until 2020.
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The combination of the benefits freeze and the inflation increase “could have a devastating impact on benefit recipients”, says Dr Craig Berry, a reader in political economy at Manchester Metropolitan University.
“As the cost of living rises rapidly… the real value of benefits falls – intensifying a problem recipients have been dealing with for several years already,” he explains.
Food bank usage could increase and more people could fall into rent arrears.
Universal Credit reform
Universal Credit has been widely criticised since implementation began in 2013. It has undergone a number of changes with new reforms recently announced by Ms Rudd.
However, Dr Berry suggests that future changes, especially those that are costly, might be reconsidered in the event of a no deal.
“The dire consequences of no-deal for the public finances mean that further concessions on the design of Universal Credit will become increasingly unlikely,” he tells i.
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One potentially positive aspect of a no-deal Brexit for benefits claimants could be that there is an easing of sanctions.
“A no-deal Brexit will severely disrupt the normal operations of Government, one of the few upsides may be that the Department for Work and Pensions suspends or relaxes its benefit sanctions regime, as job centre staff managing claimants are moved elsewhere within the civil service,” says Dr Berry.
Money for benefits
It is not clear whether a no-deal Brexit will have any impact on the money available for Universal Credit and benefits claimants.
The decision on the amount of money put aside for benefits lies solely with the Government. And it is ministers who decide on cuts and freezes.
The Department for Work and Pensions said: “We are preparing for all eventualities to ensure claimants continue to get the right support.”
With many thanks to: I News for the original story
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