Post-Brexit Trade Survival: Looking Beyond the European Union

49 Pages Posted: 4 Aug 2017 Last revised: 31 Jan 2018

See all articles by Karen Jackson

Karen Jackson

University of Westminster

Oleksandr Shepotylo

University of Bradford - Division of Economics

Date Written: June 27, 2017

Abstract

The UK is struggling to maintain a powerful global position against a backdrop of the British public having a longstanding difficulty in appreciating the benefits of EU membership. The success of the ‘leave’ EU campaign has created huge uncertainty over future ties with the EU. The Trans-Atlantic Trade and Investment Partnership (TTIP) offers an opportunity to be part of one of the mega-regional blocks. On the other hand, the UK may attempt to compensate for losses in the EU markets by signing deals with the US or Commonwealth countries. This paper adopts a structural gravity approach to evaluate five scenarios, based on different assumptions regarding Brexit, TTIP and various free trade deals. We estimate the highest UK welfare losses, approximately 3.1%, if the TTIP comes into force alongside the UK withdrawal from the EU. Negotiating free trade agreements with the US or the largest Commonwealth countries cannot compensate for these losses.

Keywords: Transatlantic Trade and Investment Partnership, Brexit, Gravity, UK, EU

JEL Classification: F13, F15, F17

Suggested Citation

Jackson, Karen and Shepotylo, Oleksandr, Post-Brexit Trade Survival: Looking Beyond the European Union (June 27, 2017). Available at SSRN: https://ssrn.com/abstract=2993069 or http://dx.doi.org/10.2139/ssrn.2993069

Karen Jackson

University of Westminster ( email )

35 Marylebone Road
London NW1 5LS
United Kingdom

HOME PAGE: http://karen-jackson.com

Oleksandr Shepotylo (Contact Author)

University of Bradford - Division of Economics ( email )

Bradford, BD7 1DP
United Kingdom

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