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Brexit and Its Economic Consequences

Presented at the Brexit Roundtable Discussion, SUNY Buffalo, April 10, 2017

31 Pages Posted: 1 May 2017 Last revised: 15 Nov 2017

Winston W. Chang

State University of New York at Buffalo - Department of Economics

Date Written: November 13, 2017

Abstract

As the formal process of Brexit has already started, there is much uncertainty about Brexit's impacts on Britain's social, political, and economic future. This paper examines the economic impact. After briefly discussing some significant EU treaties that serve as the background materials, it presents the key arguments advocated by the leave and remain camps. The economic impact depends critically on the negotiation outcomes. Aside from the debate on the divorce costs, there are numerous issues that must be negotiated, such as immigration, trade in goods, services, agriculture, fisheries, and financial regulations. We discuss various scenarios of possible new trade regimes, resulting in different impacts on the UK economy. With each side having its bargaining chips to play, the trade-offs between "give and take" in the negotiation game are analyzed. Considering various strategic options, this paper urges rationality and cooperation, especially weighing both sides' entwined economic interests, in addition to their mutual security, defense, environmental, and world concerns. The potential gains and losses in the event where the UK contemplates new trade arrangements with the non-EU countries are analyzed in the Appendix.

Keywords: Brexit, Treaty of Rome, Maastricht Treaty, Treaty of Lisbon, customs union, free trade agreement, EFTA, CAP, CFP, passporting, and quota-hopping

JEL Classification: F13, F15, F51, F53

Suggested Citation

Chang, Winston W., Brexit and Its Economic Consequences (November 13, 2017). Presented at the Brexit Roundtable Discussion, SUNY Buffalo, April 10, 2017. Available at SSRN: https://ssrn.com/abstract=2960687 or http://dx.doi.org/10.2139/ssrn.2960687

Winston Chang (Contact Author)

State University of New York at Buffalo - Department of Economics ( email )

453 Fronczak Hall
Department of Economics, SUNY at Buffalo
Buffalo, NY 14260
United States
716-645-8671 (Phone)
716-645-2127 (Fax)

HOME PAGE: http://economics.buffalo.edu/facultyprofiles/winston-chang/

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