Post-Brexit trade survival: Looking beyond the European Union
brexit
consultancy
gravity
Economic Modelling, 2018. With Karen Jackson.
We explore the welfare implications of a new EU-UK relationship alongside major trade policy initiatives, evaluating five Brexit scenarios that vary in their assumptions about a UK-EU deal, TTIP, and new free trade agreements with the US or Commonwealth countries, tracking welfare changes over two decades. The impact of Brexit is negative under every scenario, with losses smallest under a soft Brexit and worse if TTIP proceeds — underscoring the value of large-bloc membership. Losses occur gradually and can be partly offset by new trade agreements, but a hard Brexit should be avoided to minimise them.
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We explore the welfare implications of a new EU-UK relationship alongside major trade policy initiatives, evaluating five Brexit scenarios that vary in their assumptions about a UK-EU deal, TTIP, and new free trade agreements with the US or Commonwealth countries, tracking welfare changes over two decades. The impact of Brexit is negative under every scenario, with losses smallest under a soft Brexit and worse if TTIP proceeds — underscoring the value of large-bloc membership. Losses occur gradually and can be partly offset by new trade agreements, but a hard Brexit should be avoided to minimise them.
Before the UK left the EU, we modelled how UK trade relationships with non-EU partners were likely to evolve once preferential access to the single market ended — asking whether new or renegotiated third-country agreements could plausibly offset the loss. The structural gravity estimates from this paper became a reference point for subsequent post-Brexit impact assessments, including several used in policy submissions.
Published in: Economic Modelling, 73(C), 317–328