EXITitis in the UK: Gravity Estimates in the Aftermath of Brexit

Steven Brakman, Harry Garretsen and Tristan Kohl

No 9292, CESifo Working Paper Series from CESifo

Abstract: The withdrawal of the United Kingdom from the European Union has had disruptive effects on international trade. As part of its ‘Global Britain’ strategy, in the wake of Brexit, the UK is pursuing a series of Free Trade Agreements with countries around the world, including Canada, Japan, Korea, Mexico, Norway, Switzerland, Turkey and possibly the United States. Closer to home, the UK is under mounting pressure to dissuade Scotland, Northern Ireland and Wales from seeking independence to regain the severed ties with the EU. We analyze the economic consequences of these scenarios with a state-of-the-art structural gravity model for major economies around the world. We find that ‘Global Britain’ yields insufficient trade creation to compensate for Brexit-induced trade losses. Our results also reveal that independence from the UK in itself would inflict greater post-Brexit economic harm on the devolved nations of Great Britain. Nevertheless, these effects could be entirely removed for each of these devolved nations conditional on a renewed trade deal with the EU.

Keywords: Brexit; gravity model (search for similar items in EconPapers)
JEL-codes: F13 F14 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-eec, nep-int and nep-isf
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Journal Article: EXITitis in the UK: Gravity Estimates in the Aftermath of Brexit (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9292

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