Hostname: page-component-78c5997874-xbtfd Total loading time: 0 Render date: 2024-11-19T23:17:16.685Z Has data issue: false hasContentIssue false
  • English
  • Français

Local Economic Effects of Brexit

Published online by Cambridge University Press:  01 January 2020

Swati Dhingra ,
Stephen Machin  and
Henry Overman
Swati Dhingra*
Affiliation:
Department of Economics and Centre for Economic Performance, London School of Economics
Stephen Machin*
Affiliation:
Department of Economics and Centre for Economic Performance, London School of Economics
Henry Overman*
Affiliation:
Department of Geography and Environment and Centre for Economic Performance, London School of Economics
*
e-mails: [email protected], [email protected]
e-mails: [email protected], [email protected]
e-mail [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper studies local economic impacts of the increases in trade barriers associated with Brexit. Predictions of the local impact of Brexit are presented under two different scenarios, soft and hard Brexit, which are developed from a structural trade model. Average effects are predicted to be negative under both scenarios, and to be more negative under hard Brexit. The spatial variation in negative shocks across areas is higher in the latter case as some local areas are particularly specialised in sectors that are predicted to be badly hit by hard Brexit. Areas in the South of England, and urban areas, are harder hit by Brexit under both scenarios. Again, this pattern is explained by sector specialisation. Finally, the areas that were most likely to vote remain are those that are predicted to be most negatively impacted by Brexit

Keywords

BrexitEU and UKlocal economic impactstrade modelsF13F15F17R1
Type
Research Articles
Information
National Institute Economic Review , Volume 242 , November 2017 , pp. R24 - R36
Copyright
Copyright © 2017 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

Thanks to Rui Costa, Nikhil Datta, Josh De Lyon and Hanwei Huang for excellent research assistance. This paper provides further methodological details and additional discussion of results first published in the CEP Brexit report by Dhingra, Machin and Overman (2017) and summarised in Clayton and Overman (2017). We thank Naomi Clayton and other researchers at the Centre for Cities for their help in producing those earlier reports. The Centre for Economic Performance (CEP) is a politically independent Research Centre at the London School of Economics. The CEP has no institutional views, only those of its individual researchers. CEP's Brexit work is funded by the UK Economic and Social Research Council. As a whole the CEP, receives less than 5 per cent of its funding from the European Union. The EU funding is from the European Research Council for academic projects and not for general funding or consultancy.

References

Arnorsson, A. and Zoega, G. (2016), ‘On the causes of Brexit’, Birkbeck Working Papers in Economics and Finance (August).Google Scholar
Baldwin, R. (ed.) (2016), Brexit Beckons: Thinking Ahead by Leading Economists, Vox EU book.Google Scholar
Becker, S., Fetzer, T. and Novy, D. (2017), ‘Who voted for Brexit? A comprehensive district-level analysis’, Centre for Economic Performance Discussion Paper 1480.CrossRefGoogle Scholar
Bell, B. and Machin, S. (2016), Brexit and Median Wages, VOX.Google Scholar
Berden, K. and Francois, J. (2015), ‘Quantifying non-tariff measures for TTIP’, Paper No. 12 in the CEPS-CTR project ‘TTIP in the Balance’ and CEPS Special Report No. 116/July 2015.Google Scholar
Berden, K., Francois, J., Tamminen, S., Thelle, M. and Wymenga, P. (2009), Non-Tariff Measures in EU-US Trade and Investment – An Economic Analysis, Ecorys report prepared for the European Commission, Reference OJ 2007/S180219493.Google Scholar
Berden, K., Francois, J., Tamminen, S., Thelle, M. and Wymenga, P. (2013), ‘Non-tariff barriers in EU-US trade and investment: an economic analysis’, Technical Report, Institute for International and Development Economics.Google Scholar
Berkum, S. Van, Jongeneel, R.A., Vrolijk, H.C.J., Leeuwen, M.G.A. Van and Jager, J.H. (2016), Implications of a UK Exit from the EU for British Agriculture; Study for the National Farmers Union, LEI Report 2016–046.Google Scholar
Brakman, S., Garretsen, H. and Kohl, T. (2017), ‘Consequences of Brexit and Options for a “Global Britain”’, CESifo Working Paper No. 6648.Google Scholar
Breinlich, H., Dhingra, S., Sampson, T. and Van Reenen, J. (2016), ‘Who bears the pain? How the costs of Brexit would be distributed across income groups’, CEP BREXIT paper no. 07.Google Scholar
Caliendo, L. and Parro, F. (2015), ‘Estimates of the trade and welfare effects of NAFTA’, The Review of Economic Studies, 82 (1), pp. 1–44.CrossRefGoogle Scholar
Clayton, N. and Overman, H.G. (2017), ‘Brexit, trade and the economic impacts on UK cities’, Centre for Cities.Google Scholar
Colantone, I. and Stanig, P. (2016), ‘Global competition and Brexit’, BAFFI CAREFIN Centre Research Paper No. 2016–44, 28 September, available at SSRN: https://ssrn.com/abstract=2870313 or http://dx.doi.org/10.2139/ssrn.2870313.CrossRefGoogle Scholar
Costinot, A. and Rodríguez-Clare, A. (2013), ‘Trade theory with numbers: quantifying the consequences of globalization’, in Gopinath, G., Helpman, E. and Rogoff, K. (eds), Handbook of International Economics, Elsevier, ISBN: 978-0-444-54314-1.Google Scholar
Coyle, D. (2017), Brexit and Globalisation, VOX.Google Scholar
Datta, N. and Dhingra, S. (2017), ‘What next for US-Europe trade policy’, Chapter 18 in Bown, C. (ed.), Economics and Policy in the Age of Trump, also on VoxEU, July.Google Scholar
Demos (2017). Making the most of Brexit.Google Scholar
Dhingra, S., Freeman, R. and Mavroeidi, E. (2017b), ‘Tariff equivalents of trade agreement provisions: what implications for UK trade negotiations?’, Working paper.Google Scholar
Dhingra, S., Huang, H., Ottaviano, G., Pessoa, J.P., Sampson, T. and Van Reenen, J. (2017a), ‘The costs and benefits of leaving the EU: trade effects’, CEP Discussion Paper No. 1478.CrossRefGoogle Scholar
Dhingra, S., Machin, S. and Overman, H.G. (2017), ‘The local economic effects of Brexit’, CEP Brexit paper no. 10.Google Scholar
Dhingra, S., Ottaviano, G., Sampson, T. and Van Reenen, J. (2016a), ‘The consequences of Brexit for UK trade and living standards’, CEP BREXIT paper no. 02.Google Scholar
Dhingra, S., Ottaviano, G., Sampson, T. and Van Reenen, J. (2016b), ‘The impact of Brexit on foreign investment in the UK’, CEP BREXIT paper no. 03.Google Scholar
Dhingra, S., Ottaviano, G., Sampson, T. and Van Reenen, J. (2016d), ‘Economists for Brexit’: A critique', CEP BREXIT paper no. 06.Google Scholar
Dhingra, S., Ottaviano, G., Van Reenen, J. and Wadsworth, J. (2016c) ‘Brexit and the impact of immigration on the UK’, CEP BREXIT paper no. 05.Google Scholar
Ebell, M. and Warren, J. (2016), ‘The long-term economic impact of leaving the EU’, National Institute Economic Review, 236, pp. 121–38.CrossRefGoogle Scholar
Ebell, M., Hurst, I. and Warren, J. (2016), ‘Modelling the long-run economic impact of leaving the European Union’, NIESR Discussion Paper No. 462.Google Scholar
Goodwin, M. J. and Heath, O. (2016), ‘The 2016 Referendum, Brexit and the left behind: an aggregate-level analysis of the result’, The Political Quarterly, 87(3), pp. 323–32.CrossRefGoogle Scholar
HM Treasury (2016), The long-term economic impact of EU membership and the alternatives, ISBN 978-1-4741-3090-5.Google Scholar
Joseph Rowntree Foundation (2016), Explaining the Characteristics Underpinning the Brexit Vote Across Different Parts of the UK.Google Scholar
Kee, H., Nicita, A. and Olarreaga, M. (2009), ‘Estimating trade restrictiveness indices’, Economic Journal, 119, pp. 172–99.Google Scholar
Los, B., Mccann, P., Springford, J. and Thissen, M. (2017), ‘The mismatch between local voting and the local economic consequences of Brexit’, Regional Studies, 51(5), pp. 786–99, available at https://doi.org/10.1080/00343404.2017.1287350.CrossRefGoogle Scholar
Mejean, I. and Schwellnus, C. (2009), ‘Price convergence in the European Union: within firms or composition of firms?’, Working Papers hal-00354190, HAL.CrossRefGoogle Scholar
Minford, P. (2016), ‘Understanding UK trade agreements with the EU and other countries’, Cardiff Economics Working Papers, No. E2016/1.Google Scholar
Novy, D. (2013), ‘Gravity redux: measuring international trade costs with panel data’, Economic Inquiry, 51(1), pp. 101–21.CrossRefGoogle Scholar
OECD (2016), ‘The economic consequences of Brexit: a taxing decision’, OECD Economic Policy Papers, No. 16, OECD Publishing, Paris, available at http://dx.doi.org/10.1787/5jm0lsvdkf6k-en.Google Scholar
Overman, H. G., and Winters, L. A. (2005), ‘The geography of UK international trade’, Environment and Planning, 37(10).CrossRefGoogle Scholar
Overman, H. G., and Winters, L. A. (2011), ‘Trade and economic geography: the impact of EEC accession on the UK’, The Manchester School, 79(5), pp. 994–1017, available at https://doi.org/10.1111/j.1467-9957.2010.02171.x.CrossRefGoogle Scholar
Oxford Economics (2016), Assessing the Economic Implications of Brexit.Google Scholar
PWC (2017), The Impact of Brexit on (Global) Trade.Google Scholar
Timmer, M.P., Dietzenbacher, E., Los, B., Stehrer, R. and de Vries, G.J. (2015), ‘An illustrated user guide to the world input–output database: the case of global automotive production’, Review of International Economics, 23, pp. 575–605.CrossRefGoogle Scholar
Van Reenen, J. (2016), ‘Brexit's long run effects on the UK economy’, Brookings Papers on Economic Activity, Fall 2016, pp. 367–83.CrossRefGoogle Scholar
Winters, L.A. (2016), ‘Brexit and the regions: a lighter shade of dark’, Sussex Blogs, available at https://doi.org/10.1111/j.1467-9957.2010.02171.x/full.CrossRefGoogle Scholar
Zoega, G. (2016), On the Causes of Brexit: Regional Differences in Economic Prosperity and Voting Behaviour, VOX.Google Scholar
Supplementary material: PDF

Dhingra, et al. Supplementary Material

Dhingra, et al. Supplementary Material

Download Dhingra, et al. Supplementary Material(PDF)
PDF 81.3 KB