Match EU rules on manufactured goods to remove border checks and paperwork

## Summary The UK would agree with the EU to follow EU product rules for manufactured goods from January 2029, in return for each side accepting the other's product testing and approvals. One approval would cover both markets, which would cut costs for exporters and importers and should raise trade, competition and productivity. ## Objective Since 2021, firms selling manufactured goods in both markets have faced duplicate requirements. These include separate conformity assessment, UK REACH chemical registration, UK Responsible Person rules and EU non-recognition of UK-issued certificates. These non-tariff barriers reduce goods trade intensity, deter smaller exporters and fragment supply chains. The policy would work mainly through **trade** (lower fixed and variable costs of selling into the EU) and, through greater competition and scale, through **productivity**. It would also affect **investment** by restoring the UK as a base for serving the EU market. ## Measures 1. **Dynamic alignment.** Great Britain would apply EU product legislation, and later amendments to it, for: - goods under the New Legislative Framework, such as machinery, electrical equipment, radio equipment, toys, pressure equipment and construction products; - chemicals under REACH and CLP; - motor vehicle and component type approval; - medical devices and in vitro diagnostics. Medicines, food and agrifood products would be excluded. Northern Ireland already applies these rules under the Windsor Framework. The Office for Product Safety and Standards (OPSS) in the Department for Business and Trade (DBT) would coordinate. 2. **Mutual recognition of conformity assessment.** EU member states would accept certificates and type approvals issued by UK approved bodies, the Vehicle Certification Agency (VCA) and MHRA-designated bodies, and the UK would accept EU equivalents. 3. **End of UK REACH.** UK REACH registration would close. UK firms would register directly with the European Chemicals Agency (ECHA) without needing an EU-based representative. The Health and Safety Executive (HSE) would act as UK competent authority and would participate in ECHA committees without a vote. 4. **End of duplicate UKCA requirements.** UKCA marking would cease to be required for in-scope goods, and CE marking would suffice. The UK Responsible Person and EU Authorised Representative requirements would be waived reciprocally. 5. **Governance.** A joint committee would oversee the arrangement. The UK would be consulted early on new EU rules. A dispute mechanism would allow proportionate rebalancing if the UK chose not to adopt a rule. 6. **Unchanged.** Customs declarations, rules-of-origin checks and tariffs would remain, since there would be no customus union or single market membership. Border paperwork would therefore fall but not disappear. Free movement would remain unchanged. ## Timing and phasing - **2027-28:** Negotiations, with agreement assumed by spring 2028. - **2028-29:** Legislation and systems build. The arrangement would enter force on 1 January 2029. - **2029-30:** Mutual recognition would apply in full. UKCA certificates would stay valid until 31 December 2030. - **2030-31:** UK REACH registrations would transfer to ECHA by December 2030, and the UK REACH IT system would close. - **2031-32 to 2032-33:** Steady state. ## Cost and financing Figures are in £bn, in cash terms, on top of the March 2025 baseline. | | 2027-28 | 2028-29 | 2029-30 | 2030-31 | 2031-32 | 2032-33 | |---|---|---|---|---|---|---| | Gross cost (negotiation, systems, ECHA participation, alignment and surveillance) | 0.03 | 0.10 | 0.15 | 0.15 | 0.15 | 0.15 | | Savings (UK REACH, UKCA administration) | 0.00 | 0.01 | 0.05 | 0.05 | 0.05 | 0.05 | | **Net cost** | **0.03** | **0.09** | **0.10** | **0.10** | **0.10** | **0.10** | The idea's "net £100m a year, offset by ending duplicate UK systems" is read as the cost remaining after those savings. The gross figures above are assumptions. Any EU agency fee is assumed to fall within the gross cost. The net cost would be met by reprioritisation within DBT and Defra resource budgets, so DEL totals would be unchanged. Firms' compliance savings are not fiscal and are excluded. ## Delivery **Legislation:** - a UK–EU agreement ratified under the Constitutional Reform and Governance Act 2010; - a Product Regulation and Metrology Act 2025 power for dynamic reference; - primary legislation to revoke UK REACH and to amend vehicle approval law and the Medical Devices Regulations 2002. **Responsibilities:** The Cabinet Office (EU relations) would lead negotiations. DBT/OPSS, Defra/HSE, DfT/VCA and DHSC/MHRA would be responsible for implementation. **Main risks:** - The EU may decline mutual recognition of conformity assessment for a non-member, or may demand a Court of Justice role and financial contributions. - Negotiations could slip beyond 2029. - Transferring UK REACH data could prove complex. - UK approved bodies may lack capacity. - Alignment would constrain future UK divergence and trade deals with third countries. ## Relation to the baseline The March 2025 forecast assumes Brexit reduces long-run productivity by 4% and trade intensity by 15%. It includes no reversal of these effects. The forecast predates the May 2025 UK–EU understanding on food standards (SPS) and carbon market linkage. These should be analysed separately and not counted here. The baseline status quo already includes: - indefinite GB recognition of CE marking for most goods; - extended UK REACH registration deadlines; - Northern Ireland's EU alignment. Only the following additional changes should be analysed: - EU recognition of UK approvals; - ending duplicate UK REACH registration; - removing remaining UKCA and representative requirements; - the net fiscal cost shown above.

The proposal would have Great Britain follow EU product rules, including future amendments, for manufactured goods from January 2029. In scope would be New Legislative Framework goods, REACH and CLP chemicals, vehicle type approval and medical devices. In return the EU would recognise UK conformity assessment, duplicate UK REACH registration would end, and the remaining UKCA and representative requirements would be dropped. Great Britain already accepts CE marking in the baseline, so the extra gain would come mainly from lower costs for UK exporters. The policy is mapped onto the exogenous trade aggregates (exports X +0.45% and imports M +0.30% by 2032), onto trend productivity (TRPRODH and TRGDP, +0.09% by 2032 and still rising) and onto a small investment location effect through IF. The net administrative cost of ≈£0.1bn a year would be absorbed within existing budgets, so the fiscal effect comes almost entirely from receipts on higher output: borrowing would be ≈£1.55bn a year lower by 2032 and debt ≈£3.8bn lower.

### Interpretation The proposal would commit Great Britain to follow EU product legislation, and later amendments to it, for most manufactured goods from 1 January 2029. In scope would be goods under the New Legislative Framework (machinery, electrical and radio equipment, toys, pressure equipment and construction products), chemicals under REACH and CLP, motor vehicle and component type approval, and medical devices. In return the EU would accept certificates and approvals issued by UK approved bodies, the Vehicle Certification Agency and MHRA-designated bodies. UK REACH would close, with UK firms registering directly with the European Chemicals Agency, and the remaining UKCA marking, UK Responsible Person and EU Authorised Representative requirements would be dropped. Much of the import side is already in the March 2025 baseline. Great Britain accepts CE marking indefinitely for most goods, UK REACH deadlines have been extended, and Northern Ireland already applies EU rules. The incremental change therefore falls mainly on UK exporters, who would no longer need separate EU testing, an EU-based representative or a duplicate chemical registration. Customs declarations, rules-of-origin checks and tariffs would remain, so border paperwork would fall but not disappear. Negotiation spending would begin in 2027-28. Trade effects would start in 2029, with a small anticipatory investment response after the assumed spring 2028 agreement. In the published OBR model, exports (X) and imports (M) are exogenous. The March 2025 judgement that Brexit lowers trade intensity by 15% and productivity by 4% is imposed through those trade aggregates and through trend productivity per hour (TRPRODH) and trend output (TRGDP). A partial reversal is therefore mapped onto the same levers. Exports would be ≈0.45% and imports ≈0.30% above baseline by 2032. Trend productivity would be ≈0.09% higher and still rising. Total gross fixed capital formation (IF) would be lifted by ≈£150m a quarter by 2032, capturing firms that choose the UK as a base for EU sales. Each shock phases in from its start quarter to the stated 2032Q4 value. The net administrative cost of ≈£0.1bn a year would be met by reprioritisation within existing departmental budgets. Public sector current expenditure (PSCE) is therefore left unchanged and no spending shock is applied. The May 2025 food standards (SPS) and carbon-market understandings are excluded, as the proposal asks. The costing assumes the EU agrees full mutual recognition on the proposed timetable. If the EU offered only alignment without recognising UK approvals, most of the incremental impulse would collapse. ### How it works through the OBR model 1. **Cheaper certification would raise UK–EU trade in manufactured goods.** UK exports of in-scope goods to the EU are ≈£95bn a year in 2024 prices, roughly half of UK goods exports to the EU. Duplicate EU testing, an EU-based representative and separate type approval are assumed to cost the equivalent of ≈1.25% of the value of those sales. With a trade elasticity of ≈4, removing them would raise in-scope exports to the EU by ≈5% once firms have adjusted, lifting total exports (X) by ≈0.45% by 2032. The import-side gain is smaller, because CE recognition already applies there. It comes to ≈0.3% of value on ≈£150bn of in-scope imports, mainly from ending UK REACH and UK Responsible Person duties. Together with the import content of the extra exports (the model's 0.376 weight on goods exports weighted by import content, MXG), imports (M) would rise by ≈0.30%. Fixed costs like these matter most to small firms, which is why the post-2021 fall in UK–EU trade was sharpest among small, low-value exporters. Cutting those costs would bring some of these firms back. 2. **More trade would raise productivity, but only gradually.** The OBR's own Brexit judgement, a 15% fall in trade intensity costing 4% of productivity, implies an elasticity of productivity to trade intensity of ≈0.27. Trade intensity would be ≈0.4% higher by 2032 and is assumed to reach ≈1% in the long run, implying a long-run productivity gain of ≈0.25–0.3%. Only about a third of that is assumed to arrive by 2032, so trend productivity per hour (TRPRODH) and trend output (TRGDP) are raised by ≈0.09% by then. Selling more easily into a market of 450 million people brings more competition, larger production runs and faster adoption of best practice. Those gains come through firms entering, leaving and reorganising, which takes many years. 3. **Higher market-sector output would lift the desired capital stock and business investment.** The gain accrues to the market sector, so market-sector gross value added (MSGVA) would rise by ≈0.14% by 2032. In the investment block, desired capital stock (KSTAR) = exp(log(MSGVA) − 0.4·log(COC) + 2.43). There is no tax change, so the user cost of capital (COC) is unchanged and KSTAR rises one-for-one with MSGVA. Business investment (IBUS) has a unit coefficient on lagged MSGVA growth and closes the gap between actual and desired capital (KGAP) at ≈4% a quarter. On top of this, a location effect of ≈£0.6bn a year by 2032 is added through IF. It reflects automotive, chemical and medical-technology projects that could again serve the EU from a UK base on a single approval. Together these lift IBUS by ≈0.35% by 2032. Firms invest when they expect larger markets, and a single approval removes one reason to put new capacity inside the EU instead. 4. **Wages would catch up with productivity only slowly, so profits would gain first.** The equation for private sector average earnings (PSAVEI) passes through only 0.264 of a rise in output per worker in the same quarter. Output per worker here is MSGVA relative to market-sector employment (EMS). The remainder is closed by an error-correction term of ≈0.043 a quarter, a half-life of roughly four years. By 2032, then, a good part of the productivity gain would still sit in company gross trading profits (FYCPR), some of which would reach households as household dividend receipts (NDIVHH). Slightly lower consumer prices would also add to real incomes. Real household disposable income (RHHDI) would be ≈0.08% higher by 2032. Workers share in higher productivity through pay settlements struck year by year, which is why the model spreads the pass-through over several years. 5. **Consumption would follow income and wealth.** Consumption (CONS) responds to RHHDI with a short-run coefficient of 0.10. In the long run it depends on income (0.44), net financial wealth (0.22) and physical wealth (0.11), adjusting towards that level at ≈12.5% a quarter. Equity prices (EQPR) track nominal GDP in the model, so household financial wealth would also edge up. CONS would be ≈0.07% higher by 2032. Households treat a lasting productivity gain as permanent income and spend most of it, but because the extra income arrives slowly, so does the extra spending. 6. **Output would rise mainly because the economy's supply capacity grows.** GDP at market prices (GDPM) would be ≈0.12% above baseline by 2032. About 0.09 percentage points of that is the higher trend and ≈0.03 points is a small positive output gap from extra demand. On the expenditure side, that is roughly +0.04 points from net trade, +0.03 points from business investment and +0.045 points from consumption. Because the gain is mostly on the supply side, it would not overheat the economy or call for offsetting monetary policy. 7. **The labour market would barely change.** Market-sector employment (EMS) responds to output growth, with a coefficient of 0.17 on lagged MSGVA growth. Its long-run level, however, depends on output relative to the real cost of labour, and productivity-led growth raises both together. Only the small demand-led part of the output gain would draw in extra workers. Applying the usual relationship between spare capacity and joblessness (Okun's law), the unemployment rate (LFSUR) would be ≈0.01 percentage points lower from 2029. More productive firms can produce more with the same staff, so the policy is about better-paid jobs more than more jobs. 8. **Consumer prices would edge down.** Productivity gains lower market-sector unit labour costs (ULCMS) until wages catch up. ULCMS carries large weights in the cost indices for manufacturing (36.8) and services (70.5). These flow through the retail cost index (RPCOST) into CPI excluding rents (CPIX), and so into the consumer expenditure deflator (PCE). Importers would also save on UK REACH and UK Responsible Person costs. A tighter labour market typically lifts wages and prices (the Phillips channel), and the wage equation carries a coefficient of −0.0096 on the change in LFSUR. With unemployment barely moving, that offsetting pressure is negligible here. PCE would be ≈0.03% below baseline by 2032. 9. **Gilt yields and Bank Rate would be essentially unchanged.** The 20-year gilt yield (RL) and Bank Rate (R) are exogenous in the model. Debt would be only ≈0.1% of GDP lower by 2032 and inflation only marginally lower, so neither markets nor the Monetary Policy Committee would be expected to react measurably. RL is held on baseline, implying a move of less than 1 basis point. A favourable supply shock that slightly lowers inflation would, if anything, give the Bank a little room to ease, but that is not assumed. ### Key assumptions - **Baseline and incremental scope:** the March 2025 EFO is rolled forward to 2032 at ≈1.7% real growth and 2% CPI. CE recognition in Great Britain, extended UK REACH deadlines and Northern Ireland's alignment are already in the baseline, and the SPS and carbon-market deals are excluded. Only EU recognition of UK approvals, the end of duplicate UK REACH and the removal of the remaining UKCA and representative requirements are scored. - **In-scope trade:** ≈£95bn of UK exports to the EU and ≈£150bn of imports from the EU in 2024 prices, about half of UK–EU goods trade. Aerospace, medicines and food are outside scope. - **Trade-cost reduction:** ≈1.25% of value on in-scope exports and ≈0.3% on in-scope imports. Customs declarations, rules of origin and tariffs are unchanged. - **Trade elasticity:** ≈4. The response builds over 2029–2032 as UKCA certificates lapse (end-2030) and UK REACH registrations move to ECHA (December 2030). - **Productivity elasticity and speed:** ≈0.27 to trade intensity, taken from the OBR's 15%/4% Brexit judgement. About a third of the long-run gain of ≈0.25–0.3% arrives by 2032. - **Investment location effect:** ≈£0.6bn a year of extra business investment by 2032, imposed through IF and starting in 2028Q3 after the assumed agreement. - **Cost-of-capital elasticity of desired capital stock:** −0.4, as coded in the OBR investment block. The user cost of capital is unchanged because no tax or allowance changes. - **Wage pass-through:** as coded in the private sector earnings equation, 0.264 on impact and an error correction of 0.043 a quarter. - **Monetary-policy reaction:** Bank Rate (R) is held on its baseline path and the 20-year gilt yield (RL) is unchanged, a move of under 1bp. - **Fiscal costs and financing:** gross administrative cost of £0.03bn–£0.15bn a year and savings of up to £0.05bn a year. The net ≈£0.1bn a year is reprioritised within DBT and Defra DEL. There are no Barnett consequentials, because product regulation is UK-wide and DEL totals are unchanged. - **Tax content of extra output:** ≈37% of the rise in nominal GDP. - **Delivery profile:** negotiation in 2027–28, agreement in spring 2028 and entry into force in January 2029. No measurable transition dip is assumed, because firms could keep using CE marking throughout. - **Baseline levels:** nominal GDP ≈£3.48tn in 2030 and ≈£3.75tn in 2032. PSND is ≈£3.5tn (≈94% of GDP) at end-2032. These are estimates. The coefficients taken from the OBR model itself are comparatively firm and do little to change the answer: the −0.4 cost-of-capital elasticity, the consumption and wage equations, and the import weights. Most of the uncertainty lies in inputs from outside the model. The biggest is whether the EU grants mutual recognition at all. Without it, UK exporters would still need EU testing and representatives, the export gain would largely vanish, and the 2032 GDP effect would fall to perhaps ≈0.03–0.05%, mostly from ending duplicate UK REACH. Next comes the size of the remaining technical barrier (the assumed ≈1.25% cost-equivalent) and the trade elasticity of ≈4. The GDP and fiscal results scale roughly in proportion to their product, so halving either would roughly halve the gain. Evidence on mutual recognition agreements could support figures up to about half as large again. The productivity link is the other key judgement. The ≈0.27 elasticity is borrowed from the OBR's Brexit assumption, but nothing in the model pins down how fast it arrives. If only a sixth of the long-run gain arrived by 2032 rather than a third, GDP would be ≈0.07–0.08% higher in 2032 rather than 0.12%. Borrowing would then be ≈£0.6bn a year higher than in the central case. Faster diffusion would push the other way. Smaller sources of risk are the investment location effect, the monetary-policy reaction (Bank Rate held on baseline) and the counterfactual, which assumes the full Brexit effect is in the baseline with no further unilateral easing. As a rule of thumb, every 0.01 percentage point on 2032 GDP is worth ≈£0.14bn a year on borrowing. ### Headline results Output (GDPM) would rise slowly and steadily. It would be ≈0.01% above baseline in 2028 as firms bring forward investment after the assumed agreement, ≈0.03% in 2029 when the arrangement enters force, ≈0.06% in 2030 and ≈0.12% by 2032. Most of the trade response would be in place by 2031-32, once UKCA certificates have lapsed and UK REACH registrations have moved to the European Chemicals Agency. The productivity gain that follows would still be building at the end of the horizon, so GDP would keep rising relative to baseline towards ≈0.25–0.3% in the late 2030s. Business investment (IBUS) moves first and furthest, reaching ≈0.35% above baseline by 2032. The larger accessible market lifts the desired capital stock, and some EU-facing projects return to the UK. Consumption (CONS) lags at ≈0.07% by 2032, because pay catches up with productivity only over several years. The consumer expenditure deflator (PCE) would be ≈0.03% lower, the unemployment rate (LFSUR) ≈0.01 percentage points lower and the 20-year gilt yield (RL) unchanged. This is a small, supply-led improvement that neither strains capacity nor moves markets. In scale, the policy would recover only a small slice of the 4% productivity loss that the OBR attributes to Brexit: ≈2–3% of it by 2032 and ≈7% in the long run. Customs declarations, rules of origin, services trade and agrifood would be untouched. The import side of product regulation was also already eased in the baseline by Great Britain's recognition of CE marking.

### Costing the policy - **Gross static cost (mechanical spending increase):** +£0.69bn over 2027–2032. This is the proposal's gross cost of negotiation, systems, participation in the European Chemicals Agency, alignment and market surveillance. It rises from £0.03bn in 2027-28 to £0.15bn a year and is converted here to calendar years. - **Savings from closing UK REACH and UKCA administration:** −£0.20bn. These are the running costs of duplicate UK systems that would no longer be needed, reaching £0.05bn a year from 2029-30. - **Reprioritisation within DBT and Defra budgets:** −£0.49bn. The remaining net cost of ≈£0.1bn a year would be absorbed within existing resource budgets. Departmental totals, and so public sector net borrowing (PSNB), are unchanged on this line, although other programmes in those departments would be squeezed. - **Demand feedback (IT / NIC / VAT on extra exports, investment and consumption):** −£1.21bn. Extra activity from exports, business investment and consumption raises receipts at ≈37% of the demand-led rise in nominal GDP, plus a small saving of ≈£0.1bn on unemployment-related benefits. This channel dominates in 2028–29, when anticipatory investment and the first export gains come through. - **Supply-side receipts feedback (higher productivity and potential output):** −£2.35bn. The ≈0.09% rise in trend productivity by 2032 lifts profits, pay and spending, and so the whole receipts base. This is the bulk of the fiscal gain and it is still growing at the end of the horizon. - **Debt-interest saving (lower debt):** −£0.23bn. Lower borrowing builds up into lower debt, saving interest at ≈4% on the average reduction. The 20-year gilt yield (RL) is assumed unchanged. - **Net cumulative PSNB change:** −£3.79bn. This is the sum of the rows above. Borrowing would be ≈£1.55bn a year lower by 2032 (≈0.04% of GDP), and the saving would keep rising after the horizon. ### Debt path The cumulative ≈£3.8bn fall in borrowing feeds one-for-one into public sector net debt (PSND). PSND would be ≈£3.8bn lower at the end of 2032, against a baseline of ≈£3.5tn. With nominal GDP of ≈£3.75tn in 2032, the lower numerator alone would cut the debt-to-GDP ratio by ≈0.10 percentage points. Nominal GDP would also be ≈0.10% higher (real GDP +0.12%, prices slightly lower). With a baseline debt ratio of ≈94%, the bigger denominator takes off a further ≈0.09–0.10 points. Normally a higher nominal GDP denominator partly offsets a higher debt numerator. Here both move in the government's favour, so PSND/GDP would be ≈0.20 percentage points lower by 2032. On the OBR's standard assumptions the policy would more than pay for itself. Its cash cost is ≈£0.1bn a year and is absorbed within existing budgets anyway. Higher output would cut borrowing by ≈£1.55bn a year by 2032, and by ≈£4–5bn a year once the productivity gain is fully in place in the late 2030s. The saving is small relative to the ≈£10bn of current-budget headroom in the March 2025 forecast. It also depends entirely on the EU agreeing mutual recognition, and the OBR would be unlikely to score it until an agreement is concluded and its terms are known.

### Overall pattern Households would gain ≈£1.65bn a year by 2032, ≈£57 per household on average, from slightly higher pay, dividends and lower consumer prices. This is the after-tax household share of the ≈£3.75bn rise in nominal GDP in that year. It excludes ≈£1.4bn of extra tax and the profits retained by firms or paid to foreign owners. The direct beneficiaries are businesses: manufacturers that sell into the EU, especially small exporters, and their supply chains. Households gain through them. In cash terms the gain rises with income, from ≈£20 a year for the poorest tenth to ≈£120 for the richest, because pay and shareholdings rise with income. As a share of income it is almost flat at ≈0.11–0.15%, slightly higher in the middle where manufacturing jobs are concentrated, so the measure is broadly neutral. Once the ≈£1.55bn a year fall in borrowing by 2032 is counted, the average household would be a modest net winner, and no group would directly pay for the gain. ### Who gains - **Owner-managers of small manufacturing exporters:** ≈£2,500 a year, ≈3.9% of income, for ≈20,000 households. A single UK approval would cover the EU market. That would remove the duplicate EU testing, EU representative fees and chemical registration costs that bear most heavily on small firms, and the savings would flow straight into their profits. - **Households with a worker in in-scope manufacturing:** ≈£200 a year, ≈0.4% of income, for ≈1.2 million households. Workers in vehicle, chemical, machinery, electrical and medical-device firms would share in higher output and productivity through pay. The amount is limited by 2032 because wages catch up with productivity only over several years. - **Shareholders and pension savers in UK manufacturers:** ≈£150 of extra wealth per household for ≈20 million households, ≈£3bn in total. This is a one-time rise in asset values, not income. Higher expected profits of EU-facing UK manufacturers would be built into share prices, but much of the gain goes to foreign owners, so the UK household share is modest. ### Who loses - **No sizeable direct household losers, and lower borrowing:** no large household group would be worse off in cash terms. Firms selling UK Responsible Person, UK REACH registration and duplicate testing services, a niche industry of a few thousand jobs, would lose business, although UK approved bodies would gain the right to certify for the EU market. Past spending on UKCA and UK REACH compliance would become a sunk cost. The less tangible cost is loss of control over future product rules, which could raise costs for domestic-only firms if EU rules tighten. Borrowing would be ≈£1.55bn a year lower by 2032, which benefits future taxpayers, as set out below. ### Paying for it and bond markets - **Future taxpayers:** ≈£55 a household a year, ≈0.12% of income. Borrowing would be ≈£1.55bn a year lower in 2032, and £1.55bn ÷ ≈29 million households ≈ £53, rounded to £55 a household. This is an ongoing annual amount, not a one-off or a total over the horizon, and it would keep growing after 2032. - **Future taxpayers (lower debt):** ≈£130 a household. Debt would be ≈£3.8bn lower by the end of 2032, and £3.8bn ÷ ≈29 million households ≈ £130 each. That is a one-off total that future taxpayers would not need to service or repay. - **Mortgage borrowers:** £0. The 20-year gilt yield (RL) would move by less than 1 basis point. Mortgage costs change by ≈£1,400 a year per 1 percentage point on an average ≈£140,000 mortgage, so a move this small would not reach mortgage rates. Under the fiscal rules the lower borrowing would either be banked, reducing the tax rises or spending restraint needed later, or spent elsewhere. If it were returned through broad-based tax cuts, higher-income households would gain most in cash terms, roughly in proportion to the taxes they pay. ### Across the income distribution The decile figures rise in cash from ≈£20 a year in the poorest tenth to ≈£120 in the richest, but stay within a narrow band of ≈0.11–0.15% of income. The poorest households gain mainly through slightly lower prices on manufactured goods, which make up a larger share of their spending. The middle deciles (fourth to seventh) gain a little more as a share of income, because skilled manufacturing jobs in vehicles, chemicals and machinery are concentrated there. The top decile gains most in cash, through higher pay and dividends, but less as a share of income. The averages hide a strong regional and occupational pattern. Households in the West Midlands, the North East, the North West and the Humber, where vehicle, chemical and machinery plants cluster, would gain several times the average. Pensioner and non-working households elsewhere would see only the small price effect of ≈£10–20 a year. ### Caveats These figures rest on three incidence assumptions. First, by 2032 roughly half of the household gain comes through pay, a third through lower prices and the rest through profits, with wages catching up further after 2032. Second, a large share of extra manufacturing profits goes to foreign owners or is retained by firms. Third, the trade and productivity effects reach the assumed size, which itself depends on the EU agreeing mutual recognition. The figures are static first-round allocations of the GDP gain and exclude the small further effects on jobs, prices and interest rates shown in the macro tables. Averages mask large variation within groups, especially between small firms that would resume EU sales and those that never exported. The allocation leans on the ONS Effects of Taxes and Benefits on Household Income, the Living Costs and Food Survey, the Labour Force Survey and HMRC trade statistics by business size.