Key points: • Even with the free trade agreement (FTA) announced on Christmas Eve, Brexit increases UK-EU trade costs, reduces trade between them, and requires resources for form-filling, queuing, etc. These in turn, lead to changes in consumption which reduce UK residents’ welfare. • Exports of value added will fall by nearly 5.5% relative to a pre-Brexit scenario and GDP by 4.4%. If there had been no FTA, each of these harms would have been about one-third larger and the variability of the losses across sectors would have been larger. • The biggest losses in UK exports to the EU are predicted to be in motor vehicles, chemicals, and food. These large declines in gross exports of goods reduce the indirect exports of their suppliers of services very significantly. • Brexit will have a major impact in terms of reducing global value chains. The competitiveness of UK inputs into EU exports will induce declines in UK multilateral value added exports (UK value embodied in other countries’ exports). • The impact of Brexit is due to the loss of the cost-reducing effects of the European Single Market. A shallow FTA such as that just announced can to little to address those.
The cost of Brexit
ILARIA FUSACCHIA;
2020-01-01
Abstract
Key points: • Even with the free trade agreement (FTA) announced on Christmas Eve, Brexit increases UK-EU trade costs, reduces trade between them, and requires resources for form-filling, queuing, etc. These in turn, lead to changes in consumption which reduce UK residents’ welfare. • Exports of value added will fall by nearly 5.5% relative to a pre-Brexit scenario and GDP by 4.4%. If there had been no FTA, each of these harms would have been about one-third larger and the variability of the losses across sectors would have been larger. • The biggest losses in UK exports to the EU are predicted to be in motor vehicles, chemicals, and food. These large declines in gross exports of goods reduce the indirect exports of their suppliers of services very significantly. • Brexit will have a major impact in terms of reducing global value chains. The competitiveness of UK inputs into EU exports will induce declines in UK multilateral value added exports (UK value embodied in other countries’ exports). • The impact of Brexit is due to the loss of the cost-reducing effects of the European Single Market. A shallow FTA such as that just announced can to little to address those.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
