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Should We Stay or Should We Go? The economic consequences of leaving the EU

Author

Listed:
  • Swati Dhingra
  • Gianmarco I. P. Ottaviano
  • Thomas Sampson

Abstract

We analyze the effects of Brexit on the UK economy. The most important economic consequence of Brexit would likely be reduced trade with EU countries. We consider an optimistic scenario with relatively small increases in trade barriers between the UK and the EU and a pessimistic scenario with larger rises. In the optimistic scenario Brexit reduces UK income per capita by 1.1% and in the pessimistic scenario income per capita falls by 3.1%. The effect of Brexit on FDI and migration would impose additional costs on the UK and following Brexit the UK would not benefit from future EU free trade agreements such as the Transatlantic Trade and Investment Partnership currently being negotiated with the United States.

Suggested Citation

  • Swati Dhingra & Gianmarco I. P. Ottaviano & Thomas Sampson, 2015. "Should We Stay or Should We Go? The economic consequences of leaving the EU," CEP Election Analysis Papers 022, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepeap:022
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    Cited by:

    1. Cipullo, Davide & Reslow, André, 2019. "Biased Forecasts to Affect Voting Decisions? The Brexit Case," Working Paper Series 364, Sveriges Riksbank (Central Bank of Sweden).
    2. Hylke Vandenbussche & William Connell & Wouter Simons, 2022. "Global value chains, trade shocks and jobs: An application to Brexit," The World Economy, Wiley Blackwell, vol. 45(8), pages 2338-2369, August.
    3. Ansgar Belke & Irina Dubova & Thomas Osowski, 2018. "Policy uncertainty and international financial markets: the case of Brexit," Applied Economics, Taylor & Francis Journals, vol. 50(34-35), pages 3752-3770, July.
    4. Jamal Bouoiyour & Refk Selmi, 2016. "Brexit concerns, UK and European equities: A lose-lose scenario?," Economics Bulletin, AccessEcon, vol. 36(3), pages 1686-1693.
    5. Hylke Vandenbussche & William Connell Garcia & Wouter Simons, 2018. "The cost of non-TTIP: a global value chain approach," Working Papers of Department of Economics, Leuven 617062, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    6. International Monetary Fund, 2016. "United Kingdom: Selected Issues," IMF Staff Country Reports 2016/169, International Monetary Fund.
    7. Phedon Nicolaides & Roxana Nedelescu (née Sandu) & Joanna Hornik & Gibran Watfe & Gil Stein, 2016. "A New Settlement for the UK: A “Leap in the Dark”," Bruges European Economic Policy Briefings 39, European Economic Studies Department, College of Europe.

    More about this item

    Keywords

    Trade; European Union; welfare; Brexit; #ElectionEconomics; government policy; 2015 general election;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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