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Economic costs of Brexit

Author

Listed:
  • Michael Heise

    (Allianz SE)

  • Ana Boata

    (Euler Hermes)

Abstract

Brexit has been and continues to be a huge economic burden for the UK economy and its partners. We estimate that the Eurozone as a whole missed around EUR60bn of potential outlets on the UK market since the Brexit vote. It may take a last minute decision to avoid the costs of a hard Brexit, which are significant and underestimated by many prominent proponents of Brexit. In our view, a “no deal Brexit” would trigger two consecutive years of recession in the UK and cut Eurozone growth by at least −0.5 pp. per year. A “no Brexit deal” would have strongly negative repercussions for the UK’s trading partners, especially for Germany. Exports in EUR terms fell by almost −6% in 2016–17 cumulated (or EUR5bn in value terms) and export losses should reach EUR8bn per year in a “no Brexit deal” scenario. The type of a Free Trade Agreement between the UK and the EU is most essential in the long run. We estimate UK growth to average 1.5% over the transition period, half of the 2000–07 average for example.

Suggested Citation

  • Michael Heise & Ana Boata, 2019. "Economic costs of Brexit," International Economics and Economic Policy, Springer, vol. 16(1), pages 27-30, March.
    • Handle: RePEc:kap:iecepo:v:16:y:2019:i:1:d:10.1007_s10368-018-00428-9
    DOI: 10.1007/s10368-018-00428-9
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    Cited by:

    1. Jakub Sukiennik & Sławomir Czetwertyński & Marcin Brol, 2022. "Selected Models of Institutional Change in Theory and Practice," Ekonomista, Polskie Towarzystwo Ekonomiczne, issue 2, pages 190-212.

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