Romesh Vaitilingam, 08 February 2021

The UK’s exit from the EU was finally completed on 1 January 2021. The IGM Forum at Chicago Booth invited its panels of leading European and US economists to express their views on the likely long-term effects of Brexit on both the UK economy and the aggregate economy of the remaining 27 EU members. As this column reports, a strong majority (86% of the panellists) agrees that the UK economy is likely to be at least several percentage points smaller in 2030 than it otherwise would have been. Views are more divided on the EU-27 economy: nearly a quarter of respondents agree that it will be at least several percentage points smaller in 2030 than it otherwise would have been; but more than a third are uncertain; while 41% do not expect the impact to be that strongly negative.

Hanwei Huang, Thomas Sampson, Patrick Schneider, 03 February 2021

The Scottish National Party is calling for a second referendum on independence from the UK. This column examines the likely effect of changes in trade costs resulting from independence and Brexit on the Scottish economy, finding that independence would be two to three times more costly for Scotland than Brexit. In addition, rejoining the European Union following independence would do little or nothing to mitigate these costs, reflecting the fact that Scotland’s trade with the rest of the UK is around four times greater than its trade with the EU. The combination of Brexit and independence is estimated to reduce Scotland’s income per capita by between 6.3% and 8.7%. 

Alejandro Graziano, Kyle Handley, Nuno Limão, 26 January 2021

Following the Brexit referendum five years ago, firms in the UK and also those in the EU and other countries operated in an environment with increased uncertainty over future trade policies. This column presents evidence of the detrimental effects of this uncertainty on trade in the UK before any changes to trade policy had taken place. Studying the period after the Conservative Party won the general election in May 2015 until just after the Brexit referendum in June 2016, it finds that an increasing probability of Brexit significantly reduced UK export values and product entry, while increasing product exit.

Swati Dhingra, Rebecca Freeman, Hanwei Huang, 21 January 2021

Deep trade agreements are widespread and have taken the world beyond tariff liberalisation in goods trade. As the importance of global supply chains and the services sector increased across the world, shallow tariff reductions gave way to deeper commitments that address non-tariff barriers and behind the border barriers to trade. By matching dissagregated trade data to the universe of deep trade agreements, this column examines their impact on trade in goods and services, and quantifies their welfare impacts. Welfare gains from the commitments involved in such agreements have played a crucial role in overall welfare gains since the conclusion of the Uruguay Round. 

Rachel Griffith, Peter Levell, Agnes Norris Keiller, 01 December 2020

On 31 January 2020 the UK formally left the EU after over 40 years of membership. On 31 December, the UK’s transition period will come to an end and the UK and EU will establish a new trading relationship with greater trade frictions. At the time of writing, the terms of this relationship remain unclear. However, since the EU is by far the UK’s largest trading partner, the implications for the UK economy are likely to be profound. This column discusses potential consequences for the labour market – and earnings inequality – in the UK.

Beata Javorcik, Ben Kett, Katherine Stapleton, Leyla O'Kane, 20 November 2020

The Brexit referendum created the threat of a trade policy reversal on an unprecedented scale, with the potential ‘unravelling’ of decades’ worth of deep integration between the UK and the world's most integrated trading bloc. This column examines how this affected UK labour demand. It finds that UK regions exposed to the threat of future barriers on professional services exports experienced a substantial decline in the posting of online job adverts after the Brexit vote, relative to less exposed regions. A back-of-the-envelope calculation indicates that this resulted in approximately 1.5 million fewer job adverts posted after the vote than might have occurred otherwise. 

Josh De Lyon, Swati Dhingra, 19 June 2020

Despite the Covid-19 pandemic, the UK has been continuing its preparations to leave the EU by the end of 2020. Covid-19 has had a huge negative impact on the UK economy and Brexit will present another profound change in circumstances for UK businesses. Analysing real-time business survey data from the UK, this column shows that sectoral impacts of Covid-19 and Brexit are very different. Sectors that have suffered less during the lockdown are the ones that are exposed to bigger negative impacts from Brexit, as measured by actual effects since the Brexit vote and predicted effects from higher trade barriers with the EU.

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Monday, 15 June, 11:00-12:00 (CEST) - 10:00-11:00 (BST)

CER and wiiw are pleased to invite you to a panel discussion with Gabriel Felbermayr, Jill Rutter, Sam Lowe and Michael Landesmann

The following questions will be addressed:
- What is the likely outcome of current negotiations by the end of the year?
- How will different sectors be affected? What will be the impact on the UK and EU member-state economies?
- How will UK-EU relationships develop in the changing geo-economic and geo-political setting?

Panelists
Gabriel Felbermayr, President of the Kiel Institute for the World Economy
Jill Rutter, Senior Research Fellow at UK in a Changing Europe
Sam Lowe, Senior Research Fellow at the Centre for European Reform

Moderation
Michael Landesmann, Senior Research Associate and former Scientific Director, wiiw

Annie Tubadji, Don Webber, Frederic Boy, 08 May 2020

The COVID-19 pandemic is a deadly threat to human life on our planet. This column uses a spatial analytical approach to show that the pandemic has disproportionately affected the economically and socially vulnerable places across the UK along the lines of existing economic and cultural divides. The pandemic is likely to exacerbate existing real and perceived deprivation on the brink of an expected economic shock at the end of the Brexit implementation period. If health deprivation is compounded by Brexit-related economic blows, greater protests are likely to be the result.

Thiemo Fetzer, Srinjoy Sen, Pedro Souza, 27 February 2020

Homelessness and precarious living conditions are on the rise across much of the Western world. This column examines the impact of a shock to the affordability of rent in the private sector in the UK, in the form of a cut in housing subsidies for low-income households, on homelessness and insecure living conditions as well as on democratic participation. The findings suggest that the cut was, to a large extent, a false economy. The net fiscal savings for the central government were markedly offset by significantly higher local government spending to meet statutory obligations for prevention of homelessness. The cut also led to widespread distress among benefit claimants, some of whom went into rent arrears and were forcefully displaced from their homes.

Ben Broadbent, Federico Di Pace, Thomas Drechsel, Richard Harrison, Silvana Tenreyro, 26 February 2020

The UK economy has experienced significant macroeconomic adjustments following the 2016 referendum on its withdrawal from the EU. This column documents these macroeconomic adjustments systematically and demonstrates that the effects of the referendum result on the UK economy can be conceptualised as news about a future slowdown in tradable productivity growth.

Nicholas Bloom, Philip Bunn, Scarlet Chen, Paul Mizen, Pawel Smietanka, 25 February 2020

After months of political stalemate, Boris Johnson’s decisive victory in the December UK general election cleared the way for the UK to leave the EU. This column uses data from the Decision Maker Panel, a monthly survey of CFOs from around 3,000 UK businesses, to show that Brexit-related uncertainty has fallen since the election. The fall in uncertainty has been larger among more domestically focused businesses, however, and substantial uncertainty remains around the future trading relationship between the UK and the EU. There are some signs that this fall in uncertainty may lead to a modest pickup in investment, but it is still early days. 

Kai Gehring, Stephan A. Schneider, 18 February 2020

Secessionist parties draw upon rhetoric on cultural identity and political autonomy to garner votes. However, the parties’ electoral success is also influenced by the availability of regional resources. This column examines two secessionist parties in the UK – the Scottish National Party and the Welsh Plaid Cymru – and the divergence in their performance following the discovery of oil within Scotland’s hypothetical maritime borders. It finds that a 10% increase in relative regional wealth is associated with an increase of 3 percentage points in the vote share of secessionist parties. Relative regional resource wealth is more important than absolute wealth, and changes in regional resource wealth only play a role when there is baseline support for secession.

Paolo Manasse, Graziano Moramarco, Giulio Trigilia, 17 February 2020

The pound depreciated overnight by about 7% against the euro and other main currencies following the Leave victory in the UK’s EU referendum, suggesting that the markets expected Brexit to harm the British economy. Yet currency markets hailed the overwhelming victory of Brexiter Boris Johnson’s Conservative Party in the 2019 general election with a 2% appreciation of the pound. This column argues that this apparent contradiction can be explained by disentangling the effects that politics has on exchange rate expectations and a political risk premium.

Kym Anderson, 16 February 2020

Global alcoholic beverage markets have changed dramatically in recent years due to globalisation, income growth in emerging economies, changes in individual preferences, policy initiatives to curb socially harmful drinking, and, in particular, the dual trade policy shocks of Brexit and the US’s unilaterally imposed discriminatory tariffs. This column provides an overview of the major trends and projects the possible effects of Brexit and the US tariffs on the global alcohol market. It concludes that both shocks would reduce world trade in wine. Even countries not targeted by US tariffs can be worse off if those tariffs sufficiently reduce global consumption. 

, 31 January 2020

The EU is the UK’s biggest trade partner; in this video Angus Armstrong discusses the impact of Brexit on the UK’s trade patterns.

Iain Begg, David Miles, 10 January 2020

In 2020, the UK and the EU will try to strike a post-Brexit deal in financial services. At the SUERF conference in Amsterdam, David Miles and Iain Begg explain to Tim Phillips what's at stake in the negotiations, and who would suffer most if there's no deal.

Lewis Dijkstra, Hugo Poelman, Andrés Rodríguez-Pose, 07 December 2019

Support for Eurosceptic parties and the rise of populism threaten not only European integration, but peace and prosperity on the continent more broadly. Rather than attributing their rise to the individual characteristics of voters – such as age or income – this column takes a different approach. Using results from recent legislative elections to map the geography of EU discontent, it finds that purely geographical factors – chiefly, long-term economic and industrial decline – are the fundamental drivers of anti-European voting.

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SUERF and De Nederlandsche Bank Conference: Forging a new future between the UK and the EU

Date: Wednesday, 8 January 2020
Venue: De Nederlandsche Bank, Westeinde 1, Amsterdam

Brexit marks an unprecedented event in European history and while the United Kingdom has often been portrayed as holding back Europe, the reality is, that in several key areas, the UK has been on the forefront, notably pushing for deregulation, flexibility and deeper market integration. Moreover, when it comes to finance, London has a long history as Europe’s main financial centre.

This conference aims to bring together thought leaders from policy making, academia and industry to discuss the economic implications of some of the challenges uncovered by Brexit and other recent events on both sides of the Channel.

The keynote speakers are Luis de Guindos (ECB), David Miles (Imperial College Business School), Andy Haldane (Bank of England) and Dirk Schoenmaker(RSM, Erasmus University Rotterdam).

Confirmed speakers: Iain Begg, London School of Economics; Lorenzo Bini Smaghi, Société Générale; Zsolt Darvas, Bruegel; Aerdt Houben, De Nederlandsche Bank; Heather Gibson, Bank of Greece; Charles Goodhart, LSE I SUERF Fellow; Joaquim Oliveira Martins, OECD; Richard Portes, London Business School; Anthony Venables, Oxford University; Guntram Wolff, Bruegel; Phil Wooldridge, BIS.

More information about the conference and registration can be found at www.suerf.org/amsterdam2020

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