Consequences of Brexit and Options for a 'Global Britain'

28 Pages Posted: 1 Jun 2017

See all articles by Steven Brakman

Steven Brakman

University of Groningen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Harry Garretsen

University of Groningen

Tristan Kohl

University of Groningen - Faculty of Economics and Business

Date Written: April 26, 2017

Abstract

The United Kingdom has opted to leave the European Union. The trade and welfare consequences of this decision are large; most studies predict a trade and welfare loss for both the UK and the EU. The UK parliament has indicated that it aims for new and ambitious trade agreements following Brexit, but has not been explicit what type of trade agreements it envisions (except that it should be broad) or with whom specifically. In this paper, we consider the UK’s options. We first confirm, in line with existing studies, that the negative trade consequences of Brexit are substantial, especially for the UK and also for the EU. After reviewing all potential options, we have a simple answer to the question whether the UK has an alternative for the existing trade agreement with the EU. The answer is: No. Only a trade agreement with the EU can compensate for the negative trade consequences of Brexit.

Keywords: Brexit, Gravity Model, trade predictions

JEL Classification: F130, F140

Suggested Citation

Brakman, Steven and Garretsen, Harry and Kohl, Tristan, Consequences of Brexit and Options for a 'Global Britain' (April 26, 2017). CESifo Working Paper Series No. 6448. Available at SSRN: https://ssrn.com/abstract=2977770

Steven Brakman (Contact Author)

University of Groningen - Department of Economics ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
+31 50 363 3746 (Phone)
+31 50 363 3730 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Harry Garretsen

University of Groningen ( email )

Tristan Kohl

University of Groningen - Faculty of Economics and Business ( email )

P.O. Box 800
Groningen, Groningen 9700 AV
Netherlands

HOME PAGE: http://www.tristankohl.org

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