Brexit: potential impacts on the economic welfare of UK farm households

Abstract

This paper estimates the effects of potential post-Brexit UK trade and domestic agricultural policy scenarios on the economic welfare (real income) of farm households, at both regional (devolved administrations) and national level. Results show that depending on the selected scenario, particularly the retention or elimination of direct payments as currently provided under Pillar 1 of the Common Agricultural Policy (CAP), the impact varies significantly across farm types and devolved administrations. Given the substantial contribution of CAP direct payments to farm business income, their removal amplifies farm vulnerability. Hence, non-farm income is critical in safeguarding the economic welfare of most UK farm households.