The Implications of Brexit for UK and EU Regional Competitiveness (original) (raw)
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Vulnerability to the Consequences of Brexit: Evidence for Polish and Spanish Regions
E & M Ekonomie a Management, 2020
After the announcement in June 2016 that the UK would leave the EU, studies analysing the consequences of this reversal in economic integration have proliferated, mostly presenting prospective consequences for the UK economy. But Brexit will necessarily also have consequences for non-UK European countries and their regions. Given the different character and intensity of regions’ interconnections with the British economy, we assess Polish and Spanish regions’ vulnerability to Brexit in the sphere of foreign trade. We rely on the conceptual framework originally presented by Turner et al. (2003) comprising: exposure, sensitivity and resilience, which together describe the overall vulnerability to a specifi c phenomenon. We fi ll the gap in the Brexit-related literature by applying the perspective of the regions of other EU countries, engaged in trade relations with the UK. We show that geography “still matters” and due to gravity, path dependency and FDI, some regions have developed relatively stronger commercial links with the British economy. We expected to obtain the taxonomy or Polish and Spanish regions ‘mixed’ within the identifi ed clusters of vulnerability. However, it is not the case, because clusters are mainly composed by Spanish or Polish regions, with a few exceptions, in which several Polish regions are accompanied by one or two Spanish regions. The results show greater vulnerability of Spanish (more exposed but better prepared) than Polish regions (more sensitive). While Brexit is rather perceived as a national problem, its asymmetrical impact on regions’ economy through the trade channel is a serious challenge for regional policy. It is therefore the role for regional institutions to monitor the vulnerability to the Brexit consequences and to facilitate adjustments to the exporting (and importing) companies that will be severely affected. They can be assisted in searching for the alternative export (import) markets.
Trade-related effects of Brexit. Implications for Central and Eastern Europe
2020
We use a global computable general equilibrium model to analyze several scenarios of Brexit. We mainly focus on the impact of Brexit on the New Member States of the EU to complement the existing literature on Brexit. Our scenarios are based on two reasonable expectations on the outcome of the process of negotiations, ie. the Soft Brexit with a limited FTA and a Hard Brexit governed by WTO MFN rules. The shocks imposed on the CGE model include modifications of both tariff and non-tariff barriers. While the former are based on actual tariff data, the latter are estimated using an econometric model for both merchandise trade and services. Our results show that in spite of the UK being one of the most important trading partners for many of the NMS, Poland in particular, the macroeconomic effects of Brexit are mild, even in the case of a Hard Brexit. In the most pessimistic scenario of a Hard Brexit, in the long run they amount to a fall of GDP of roughly 0.4 percent. However, there are ...
Papers in Regional Science
In this paper we employ an extension of the World Input-Output Database (WIOD) with regional detail for EU countries to study the degree to which EU regions and countries are exposed to negative trade-related consequences of Brexit. We develop an index of this exposure, which incorporates all effects due to geographically fragmented production processes within the UK, the EU and beyond. Our findings demonstrate that UK regions are far more exposed than regions in other countries. Only regions in the Republic of Ireland face exposure levels similar to some UK regions, while the next most affected regions are in Germany, The Netherlands, Belgium and France. This imbalance may influence the outcomes of the negotiations between the UK and the EU.
UK regions the EU and manufacturing exports
In advance of the referendum on the UK's membership of the European Union (EU), this Brief considers the differences in how the UK's constituent regions and nations interact with other EU countries, focusing upon trade in goods. The regional dimension of the UK/EU relationship has received relatively little attention in the public debate around the implications of 'Brexit', yet the evidence examined here suggests that the notion of whether the UK will be 'better off' or 'worse off' as a result of voting to exit or remain within the EU is too simplistic. An examination of the different trade relationships that different UK regions and nations have with the EU helps us to consider both how the UK will be affected by Brexit, and who will be most affected. In particular, the Brief reflects upon the possible implications of Brexit for the policy agendas around 'rebalancing' and 'the Northern Powerhouse', which are predicated upon a resurgence of manufacturing industries in the North of England.
Trade, Businesses, and Economy of U.K. Post-Brexit— A Quantitative Analysis
International Journal of Latest Engineering and Management Research (IJLEMR), 2023
Many studies have been carried out on Brexit’s economic impact on the UK, EU27, the US, and the rest of the world. Depending on the assumption of whether Brexit will be a hard Brexit or a soft Brexit, almost all studies predicted Blows to the economies of the UK and the EU, with a more severe blow to the UK economy. With the Trade Co-operation Agreement signed by the end of the year 2020 and the actual divorce of the UK from the EU with effect from 01-01-2021, the actual effects of Brexit came to reflect in various economic data reported by various national and international agencies. This paper makes an effort to analyse these hard data and examine the Brexit impacts on various sectors. It has also taken clues from the various surveys on the problems faced by businesses on the border, shortage of labour, etc. In February 2023, a protocol on Northern Ireland was finalized which became a part of the EU-UK withdrawal agreement that now ensures that a hard border is avoided for the UK ...
Trade and foreign direct investment-related impacts of Brexit
The World Economy, 2019
We offer a general-equilibrium analysis of Brexit incorporating the state-of-the-art differences in productivity and firms' selection within manufacturing sectors à la Melitz (Econometrica, 2003, 71, 1695) and multinationals in services. Our results suggest that trade, output and average productivity diminish across most sectors in the UK and the Rest of the European Union (REU), as well as GDP, welfare, wages and capital remuneration. However, the UK loses more due to the missing preferential access to the huge EU market. Significant welfare losses along the extensive margin occur in the UK due to the lost imported varieties produced by highly productive European firms. These cannot be compensated by the new varieties of less productive domestic firms that enter the British market due to increased protectionism and reduced import competition. In addition, the emergence of barriers against multinationals, which is often ignored in previous studies, explains approximately one third of the negative effect in both the UK and REU. Furthermore, we show that the Brexit impact is about only half if we do not include both foreign direct investment barriers and Melitz structure. Thus, previous studies without these important model features would underestimate the Brexit impact significantly.
EU economic integration agreements, Brexit and trade
Review of World Economics
The effects of regionalism on trade have been extensively evaluated within a gravity model framework. With the expected exit of the United Kingdom (UK) from the European Union (EU), the prospect of regional disintegration has brought about a new impetus to studying trade policy effects. Using actual and forecast data for a panel of bilateral imports between the EU15 and the rest of the world, this paper examines the trade effects of EU economic integration agreements (EIAs), their evolution over time and the related counterfactual Brexit trade policy scenarios. Distinct trade effects are obtained for the EU trade related agreements; positive, significant and of similar magnitude for the EU and free trade agreement (FTA) coefficients, but negative and significant (and smaller in magnitude) for the regional economic partnership agreements (EPAs). The subperiod results suggest the positive coefficients of EU and FTA membership tend to diminish over time, implying earlier membership of EIAs came with greater trade benefits. Finally, in generating the predicted values for the trade effects of three alternative counterfactual Brexit scenarios (hard Brexit, hard Brexit plus, global Britain), the findings suggest an asymmetric effect depending on the perspective of the UK versus the EU. Whereas the UK's trade would decline substantially with all three country groups (the EU, the FTAs and regional EPAs) and rise substantially with the rest of the world, only minor percentage changes are predicted for EU bilateral trade.
Single European Market after Brexit
Studia Europejskie, 2018
Present economic situation in the EU after the crisis of 2008–2010, escalating protectionism among EU Member States, voices in favour of re-industrialization of the EU economy in a traditional style of the 1970s and the 1980s, and the British leadership in services and new business models are the most important challenges for the future development of the EU Internal Market, as well as for the EU economy, as a whole. Therefore, the aim of the paper is to evaluate changes in the structure of the EU economy and intra EU trade in the context of Brexit. To this end, we will analyse changes in values and shares of selected sectors directly linked to the EU Internal Market in value added and intra EU trade in 2010–2014. Moreover, in order to grasp potential consequences of Brexit, we will compare data for the EU-28 and the EU-27 (without the UK). Our research allows us to conclude that Brexit may result in reduced supply of innovative and business services with the highest added value in favour of higher shares of regular manufacturing sectors within the internal market of the EU (both in value added and intra EU-27 trade). Therefore, after the UK leaves, the EU-27 will lose its competitiveness and a strong position in intra EU trade vis-à-vis third countries.
A survey of the long-term impact of Brexit on the UK and the EU27 economies
2019
This paper reviews a sample of studies on the long-term impact of Brexit on GDP and welfare for both the UK and EU economies. It considers only official and academic studies published before the end of November 2018. The paper highlights the very wide range of results, especially for the UK, reflecting great uncertainty. The negative economic impact is more limited for the EU27 and for most Member States. Small open economies closely related to the UK are more hit than others. This is the case for Ireland due to geographical proximity, for Luxembourg with its economy specialising in financial services and for Cyprus and Malta as they are Commonwealth countries. When only the trade channel of Brexit is estimated, GDP (or welfare) losses are around 1 percentage point of GDP in the Netherlands and in Belgium while these average 0.6 percentage point of GDP in the EU27. For a same Brexit scenario, the results depend on the model specifications, on the channels considered and on some key ...
Brexit and Its Potential Effects on Trade Between the European Union and Selected Countries
2017
INTRODUcTION Great Britain, which is characterized by the distance to the concept of international economic and political integration, is considered to be a country that is slowing down the deepening of relations between the European Union member states and counterbalancing Germany and France, which are in favour of further intensifying their cooperation within the grouping. In terms of economic potential, measured by the country’s share in EU GDP in 2016, the United Kingdom ranked second (after Germany), producing around 16% of the total EU output. Leaving the European Union by this country may lead to the weakening of the European Union both in the global economy and in global trade and the deterioration of the negotiating position.