The Impact of the UK’s EU Exit on its Attractiveness to FDI and Associated Job Creation Effects

Research Report, Department for the Economy Northern Ireland, 2019

32 Pages Posted: 17 Dec 2019

See all articles by Iulia Siedschlag

Iulia Siedschlag

Economic and Social Research Institute Dublin; Trinity College Dublin - Department of Economics

Manuel Tong Koeckling

Economic and Social Research Institute (ESRI)

Date Written: March 25, 2019

Abstract

This study examines possible Brexit effects on the UK’s attractiveness to greenfield foreign direct investment (FDI) and related job creation. Our results indicate that the UK would be less attractive as a location to FDI and would experience a reduction of FDI-related job creation in any of the considered Brexit outcomes. These effects come about through reduced market potential due to lower market size and reduced access to the EU Single Market. The least damaging post-Brexit outcome would be in the case of the UK’s membership in the European Economic Area (EEA) while the most damaging scenario would be the UK leaving the EU without a withdrawal agreement. Our results suggest that to compensate post-Brexit losses in terms of its attractiveness to FDI, the UK’s government could consider a more competitive corporate tax rate or spending more on education.

Keywords: The Location Choice of Foreign Direct Investment, Brexit, Job Creation

JEL Classification: F14, F15, F16, F23

Suggested Citation

Siedschlag, Iulia and Tong Koeckling, Manuel, The Impact of the UK’s EU Exit on its Attractiveness to FDI and Associated Job Creation Effects (March 25, 2019). Research Report, Department for the Economy Northern Ireland, 2019 , Available at SSRN: https://ssrn.com/abstract=3495891 or http://dx.doi.org/10.2139/ssrn.3495891

Iulia Siedschlag (Contact Author)

Economic and Social Research Institute Dublin ( email )

Whitaker Square
Sir John's Rogerson Quay
Dublin
Ireland

Trinity College Dublin - Department of Economics ( email )

Dublin
Ireland

Manuel Tong Koeckling

Economic and Social Research Institute (ESRI) ( email )

Whitaker square Sir john Rogerson's Quay
Dublin 2
Dublin
Ireland

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
22
Abstract Views
149
PlumX Metrics