Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/201977
Authors: 
Breinlich, Holger
Leromain, Elsa
Novy, Dennis
Sampson, Thomas
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper 7751
Abstract: 
We study the impact of the 2016 Brexit referendum on UK foreign direct investment. Using the synthetic control method to construct appropriate counterfactuals, we show that by March 2019 the Leave vote had led to a 17% increase in the number of UK outward investment transactions in the remaining EU27 member states, whereas transactions in non-EU OECD countries were unaffected. These results support the hypothesis that UK companies have been setting up European subsidiaries to retain access to the EU market after Brexit. At the same time, we find that the number of EU27 investment projects in the UK has declined by around 9%, illustrating that being a smaller economy than the EU leaves the UK more exposed to the costs of economic disintegration.
Subjects: 
Brexit
foreign direct investment
synthetic control method
JEL: 
F15
F21
F23
Document Type: 
Working Paper
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