EXITitis in the UK: Gravity Estimates in the Aftermath of Brexit - Economics Seminar

Event Date: 1 February 2023

Speaker: Tristan Kohl, University of Groningen 

Time: 12-1:15pm

Location: Please contact Rachel Hill (r.hill@strath.ac.uk) for Zoom details

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 removed if independence from the UK is combined with rejoining the EU. JEL: F13, F14."

Published: 26 January 2023