Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/327686 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 12076
Publisher: 
Munich Society for the Promotion of Economic Research - CESifo GmbH, Munich
Abstract: 
This paper examines the long-term macroeconomic impacts of Brexit on the UK economy employing a dynamic general equilibrium model that incorporates endogenous firm entry, price markups and market competition. By integrating the trade frictions introduced by Brexit, the model explains how increased trade costs have altered firm behaviour, market structure, and broader economic performance. We assess a range of policy responses, from theoretically optimal but practically difficult tax-subsidy schemes, to more realistic measures aimed at reducing firm entry barriers, encouraging private and public investment, and subsidising labour costs. Our findings underscore the critical role of policies that can most directly influence firm creation, investment, and competition in addressing the structural challenges Brexit has introduced.
Subjects: 
Brexit
investment
fiscal and industrial policy
JEL: 
E65
E22
E61
Document Type: 
Working Paper
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