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
Date Written: March 25, 2019
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: Suggested Citation