Modelling the Long Term Potential Macroeconomic Impact of UK leaving the UK: case study on Wales

Sangeeta Khorana, Badri Narayanan and Nicholas Perdikis

No 333236, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: This paper employs a computable general equilibrium (CGE) dynamic simulation model to analyse United Kingdom (UK) and European Union (EU) relationship and its impact on the Welsh economy. Two potential scenarios are simulated: (a) no economic partnership agreement between the UK and EU on 31 December 2020, i.e. trade between the UK and EU and the rest of the world would revert on World Trade Organisation (WTO) basis and default Most Favoured Nation (MFN) tariffs apply. (b) a transition period, i.e. continue the existing arrangement that includes membership of the Customs Union and Single Market, for a limited period after 31 December 2020. This models the possibility of a transition period to last for either two, three, five or 10 years. Results present a negative forecast for the Welsh (and UK) economy. The scenario, which sees the UK reverting to trading with the EU on WTO terms, generates maximum losses for Wales (and the UK) in the long-term. A transition period arrangement projects long-term losses for Wales that depend on the length of transition period such that a longer transition minimises losses for Wales (and the UK).

Keywords: Political; Economy (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:333236

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