Brexit Uncertainty and Trade Disintegration

Alejandro Graziano, Kyle Handley and Nuno Limão

The Economic Journal, 2021, vol. 131, issue 635, 1150-1185

Abstract: We estimate the uncertainty effects of preferential trade disagreements. Increases in the probability of Britain’s exit from the European Union (Brexit) reduce bilateral export values and trade participation. These effects are increasing in trade policy risk across products. We estimate that at the average disagreement tariff of 4.5% the increase in the probability of Brexit after the referendum lowered EU–UK bilateral export values between 11–20%. Neither the EU or UK exporters believed a trade war was likely.

Date: 2021
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Working Paper: Brexit Uncertainty and Trade Disintegration (2018)
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