Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/205351
Authors: 
Thissen, Mark
van Oort, Frank G.
McCann, Philip
Ortega-Argilés, Rauel
Husby, Trond
Year of Publication: 
2019
Series/Report no.: 
Tinbergen Institute Discussion Paper No. TI 2019-061/VIII
Abstract: 
Any form of Brexit will impact heterogeneously in terms of sectors and regions on the competitiveness of firms in both the UK and Europe. The ongoing uncertainty about the conditions under which the UK will be leaving the EU, creates difficulties in structurally estimating these impacts. Using uniquely-detailed interregional trade data on goods and services for the EU, we apply a novel methodology that disentangles region-sector sensitivities (elasticities) of firms’ competitiveness to (non)tariff barriers from the implications of different post-Brexit UK-EU trade scenarios. This enables us to derive the impact of Brexit on the competitiveness of firms along with the degree of uncertainty that surrounds these impacts, independently from the scenarios. Our analysis demonstrates that the adverse international competitiveness shocks on UK firms are much larger than those on the rest of the EU due to the dependency of the UK on the EU via global value chains. The competitiveness shocks mean that within the UK, Brexit is likely to increase both interregional inequalities and also intra-regional inequalities. In contrast interregional inequalities across Europe may actually fall, depending on the nature of the post-Brexit UK-EU trading arrangements.
Subjects: 
Brexit
competitiveness
impact analysis
international trade
regional economics
IO analysis
JEL: 
P25
R13
B27
Document Type: 
Working Paper

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