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The trade impact of the UK’s exit from the EU Single Market

Author

Listed:
  • Christine Arriola
  • Sebastian Benz
  • Annabelle Mourougane
  • Frank van Tongeren

Abstract

This paper quantifies the sectoral trade impact in the United Kingdom and in EU countries of the UK’s exit from the Single Market, using the OECD general-equilibrium METRO model. A comprehensive free-trade agreement could lead to a fall by about 6.1% of UK exports and 7.8% of UK imports in the medium term compared to a situation where the United Kingdom would stay in the Single Market. Cost would come essentially from rising technical barriers and sanitary and phytosanitory measures on goods and rising trade costs on services. Rules of origin and border transition costs would have a small effect. Output losses in the European Union (0.4-0.5%) are expected to be less pronounced, but would vary markedly across individual countries. Ireland would experience the largest losses. Losses would also vary across sectors. Accounting for the regulatory impact of ending free movement of people for EU nationals on services trade is expected to bring some additional costs to the services economy. Those losses could be partly compensated by growth-enhancing changes to UK regulations, but only to a limited extent.

Suggested Citation

  • Christine Arriola & Sebastian Benz & Annabelle Mourougane & Frank van Tongeren, 2020. "The trade impact of the UK’s exit from the EU Single Market," OECD Economics Department Working Papers 1631, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:1631-en
    DOI: 10.1787/682c2995-en
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    Cited by:

    1. Fritz Breuss, 2021. "A Simple EU Model in EViews," WIFO Working Papers 638, WIFO.

    More about this item

    Keywords

    Brexit; free-trade agreement; general-equilibrium model;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F15 - International Economics - - Trade - - - Economic Integration
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications

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