IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/21019.html

The Brexit Vote, Productivity Growth and Macroeconomic Adjustments in the United Kingdom

Author

Listed:
  • Broadbent, Ben
  • Di Pace, Federico
  • Drechsel, Thomas
  • Harrison, Richard
  • Tenreyro, Silvana

Abstract

The UK economy experienced significant macroeconomic adjustments following the 2016 referendum on its withdrawal from the European Union. To understand these adjustments, this paper presents empirical facts using novel UK macroeconomic data and estimates a small open economy model with tradable and non-tradable sectors. We demonstrate that the referendum outcome can be interpreted as news about a future decline in productivity growth in the tradable sector. An immediate fall in the relative price of non-tradable goods induces a temporary “sweet spot†for tradable producers. Economic activity in the tradable sector expands in the short run, while the non-tradable sector contracts. Aggregate output, consumption and investment growth decelerate.

Suggested Citation

  • Broadbent, Ben & Di Pace, Federico & Drechsel, Thomas & Harrison, Richard & Tenreyro, Silvana, 2026. "The Brexit Vote, Productivity Growth and Macroeconomic Adjustments in the United Kingdom," CEPR Discussion Papers 21019, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:21019
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP21019
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The Brexit Vote, Productivity Growth and Macroeconomic Adjustments in the United Kingdom
      by Christian Zimmermann in NEP-DGE blog on 2019-09-29 01:05:34

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. José-Luis Peydró & Francesc R. Tous & Jagdish Tripathy & Arzu Uluc, 2020. "Macroprudential policy, mortgage cycles and distributional effects: Evidence from the UK," Economics Working Papers 1725, Department of Economics and Business, Universitat Pompeu Fabra.
    3. Fetzer, Thiemo & Wang, Shizhou, 2020. "Measuring the Regional Economic Cost of Brexit: Evidence up to 2019," The Warwick Economics Research Paper Series (TWERPS) 1280, University of Warwick, Department of Economics.
    4. Garcia-Macia, Daniel & Korosteleva, Julia, 2025. "Tracing productivity growth channels in the UK," Research Policy, Elsevier, vol. 54(1).
    5. Tervala, Juha, 2021. "Hysteresis and the welfare costs of recessions," Economic Modelling, Elsevier, vol. 95(C), pages 136-144.
    6. Hans-Ulrich Brautzsch & Oliver Holtemöller, 2021. "International trade barriers and regional employment: the case of a no-deal Brexit," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 10(1), pages 1-25, December.
    7. Fetzer, Thiemo & Wang, Shizhuo, 2020. "Measuring the Regional Economic Cost of Brexit: Evidence up to 2019," CEPR Discussion Papers 15051, Centre for Economic Policy Research.
    8. Renato Faccini & Edoardo Palombo, 2019. "News Uncertainty in Brexit U.K," Discussion Papers 1921, Centre for Macroeconomics (CFM).
    9. Sergei Guriev & Elias Papaioannou, 2022. "The Political Economy of Populism," Journal of Economic Literature, American Economic Association, vol. 60(3), pages 753-832, September.
    10. Garcia-Lazaro, Aida & Mistak, Jakub & Gulcin Ozkan, F., 2021. "Supply chain networks, trade and the Brexit deal: a general equilibrium analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 133(C).
    11. Margarita Rubio, 2024. "Macroprudential policies and Brexit: A welfare analysis," Economic Inquiry, Western Economic Association International, vol. 62(3), pages 1246-1267, July.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:21019. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CEPR (email available below). General contact details of provider: https://cepr.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.