The impact of Brexit on UK firms

Nicholas Bloom, Philip Bunn, Scarlet Chen (), Paul Mizen, Pawel Smietanka () and Gregory Thwaites
Additional contact information
Scarlet Chen: Stanford University
Pawel Smietanka: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH

No 818, Bank of England working papers from Bank of England

Abstract: We use a major new survey of UK firms, the Decision Maker Panel, to assess the impact of the June 2016 Brexit referendum. We identify three key results. First, the UK’s decision to leave the EU has generated a large, broad and long-lasting increase in uncertainty. Second, anticipation of Brexit is estimated to have gradually reduced investment by about 11% over the three years following the June 2016 vote. This fall in investment took longer to occur than predicted at the time of the referendum, suggesting that the size and persistence of this uncertainty may have delayed firms’ response to the Brexit vote. Finally, the Brexit process is estimated to have reduced UK productivity by between 2% and 5% over the three years after the referendum. Much of this drop is from negative within-firm effects, in part because firms are committing several hours per week of top-management time to Brexit planning. We also find evidence for smaller negative between-firm effects as more productive, internationally exposed, first have been more negatively impacted than less productive domestic firms.

Keywords: Brexit; economic uncertainty; policy uncertainty (search for similar items in EconPapers)
JEL-codes: D80 E66 G18 H32 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2019-08-30
New Economics Papers: this item is included in nep-cfn, nep-eec and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (83)

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Related works:
Working Paper: The Impact of Brexit on UK Firms (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0818

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