Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/318188.2 
Year of Publication: 
2025
Series/Report no.: 
BCAM Working Paper No. 2503
Version Description: 
This version: November 24, 2025
Publisher: 
Birkbeck, University of London, Birkbeck Centre for Applied Macroeconomics (BCAM), London
Abstract: 
We employ Synthetic Control Method techniques to estimate the causal effect of Brexit on the consumer price index (CPI) in the United Kingdom. We construct a counterfactual CPI index from a weighted pool of comparable economies and find that the price level of the United Kingdom rose approximately 7 percentage points more than its synthetic counterpart, between 2016Q2 and 2024Q4. This accounts for over a quarter of total inflation during the period. We attribute about 2 percentage points of this increase to the depreciation of the British pound after the Referendum and the remaining 5 percentage points to the change in trading relationships that ensued the 2021 Trade and Cooperation Agreement.
Subjects: 
Brexit
Exchange Rate
Trade Barriers and Consumer Prices
JEL: 
C32
E31
F13
G10
Document Type: 
Working Paper

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2 10419/318188.2 This version: November 24, 2025
1 10419/318188 First version: April 1, 2025

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