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Expecting Brexit

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  • Dhingra, Swati
  • Sampson, Thomas

Abstract

The Brexit vote precipitated the unravelling of the UK's membership of the world's deepest economic integration agreement. This paper reviews evidence on the realized economic effects of Brexit. The 2016 Brexit referendum changed expectations about future UK-EU relations. Studying its consequences provides new insights regarding the economic impacts of news and uncertainty shocks. Voting for Brexit had large negative effects on the UK economy between 2016 and 2019, leading to higher import and consumer prices, lower investment, and slower real wage and GDP growth. However, at the aggregate level, there was little or no trade diversion away from the EU, implying that many of the anticipated long-run effects of Brexit did not materialize before the new UK-EU trade relationship came into force in 2021.

Suggested Citation

  • Dhingra, Swati & Sampson, Thomas, 2022. "Expecting Brexit," CEPR Discussion Papers 16970, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16970
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    Cited by:

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    2. Vincenzo Bove & Jessica Di Salvatore & Roberto Nisticò, 2023. "Economic Sanctions and Trade Flows in the Neighborhood," Journal of Law and Economics, University of Chicago Press, vol. 66(4), pages 671-697.
    3. Di Iasio, Valentina & Wahba, Jackline, 2023. "Expecting Brexit and UK migration: Should I go?," European Economic Review, Elsevier, vol. 157(C).
    4. Asier Minondo, 2024. "How exporters neutralised an increase in tariffs," The World Economy, Wiley Blackwell, vol. 47(3), pages 1274-1296, March.
    5. Steven Brakman & Harry Garretsen & Tristan Kohl, 2023. "EXITitis in the UK: Gravity Estimates in the Aftermath of Brexit," De Economist, Springer, vol. 171(2), pages 185-206, June.
    6. Baqaee, David & Hinz, Julian & Moll, Benjamin & Schularick, Moritz & Teti, Feodora A. & Wanner, Joschka & Yang, Sihwan, 2024. "Was wäre wenn? Die Auswirkungen einer harten Abkopplung von China auf die deutsche Wirtschaft [What if? The effects of a hard decoupling from China on the German economy]," Kiel Policy Brief 170, Kiel Institute for the World Economy (IfW Kiel).

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    More about this item

    Keywords

    Brexit; Trade policy; Uncertainty; Exchange rates;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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