The negative impact of disintegration on trade: the case of Brexit

Using firm-level export and import transactions and by applying an event-study methodology, we quantify the impact of the UK's withdrawal from the EU's single market and customs union on Spain-UK trade flows. We find that Spanish exports and imports to the UK decreased by 23% and 27%, respectively, relative to the period before the Brexit referendum. Spanish exporters and importers entry into the UK declined and the probability of ending a trade relationship with the UK increased. Products affected by sanitary and phytosanitary measures, and more stringent rules of origin experienced a stronger decline in trade flows. Large firms faced a more severe decrease in exports than small ones after disintegration.