The economic consequences of the Brexit Vote

Benjamin Born, Gernot Müller, Moritz Schularick and Petr Sedlacek

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper introduces a data-driven, transparent and unbiased method to calculate the economic costs of the Brexit vote in June 2016. We let a matching algorithm determine a combination of comparison economies that best resembles the growth path of the UK economy before the Brexit referendum. The economic cost of the Brexit vote is the difference in output between the UK economy and and its synthetic doppelganger. We show that, contrary to public perception, by the third quarter of 2017 the economic costs of the Brexit vote are already 1.3% of GDP. The cumulative costs amount to almost 20 billion pounds and are expected to grow to more than 60 billion pounds by end-2018. We provide evidence that heightened policy uncertainty has already taken a toll on investment and consumption.

Keywords: Brexit; European Union; policy uncertainty; synthetic control method (search for similar items in EconPapers)
JEL-codes: E65 F13 F42 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2017-11
New Economics Papers: this item is included in nep-int and nep-mac
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Citations: View citations in EconPapers (10)

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http://eprints.lse.ac.uk/87174/ Open access version. (application/pdf)

Related works:
Working Paper: The Economic Consequences of the Brexit Vote (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:87174

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