Brexit leading to higher energy bills in Britain: Study
London: Consumers in Britain paid on average 75 pounds more for gas and electricity in the year after the referendum in which the majority supported the withdrawal of the UK from the European Union (EU), says a study.
Energy bills in the country increased overall by two billion pounds in 2017 due to the lower value of the pound relative to the euro and the US dollar, showed the findings by researchers from the University College London (UCL).
A hard Brexit could lead to a further average rise of 61 pounds per year in the event of a further devaluation of the sterling to pound-euro parity, according to the research.
“We know that exchange rates fell after the EU referendum but we can now look at the effect this had on wholesale and consumer energy prices,” lead author Giorgio Castagneto Gissey said in a statement released by UCL on Sunday.
“The exchange rate depreciation plus the fact that energy prices are now much more volatile means consumers have been paying more and are facing even higher bills over the next several months,” he said.
For the study, the researchers analysed the behaviour of the wholesale electricity price in the UK alongside the sterling to euro exchange rate between 2012 and 2017.
They found that as the exchange rate fell dramatically after the EU referendum the electricity price increased over the subsequent year, directly reflecting the resulting higher cost of energy imports.
The prediction following a hard Brexit is based on an assumption of a further depreciation of sterling to sterling-euro parity, with a 12 per cent drop from the exchange rate of 1.14 on November 3, 2018.
The change in annual bills was calculated assuming everything else is held constant between March 29, 2019 and March 29, 2020.