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Expecting Brexit

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  • Dhingra, Swati
  • Sampson, Thomas

Abstract

The Brexit vote precipitated the unravelling of the UK's membership of the world's deepest economic integration agreement. This paper reviews evidence on the realized economic effects of Brexit. The 2016 Brexit referendum changed expectations about future UK-EU relations. Studying its consequences provides new insights regarding the economic impacts of news and uncertainty shocks. Voting for Brexit had large negative effects on the UK economy between 2016 and 2019, leading to higher import and consumer prices, lower investment, and slower real wage and GDP growth. However, at the aggregate level, there was little or no trade diversion away from the EU, implying that many of the anticipated long-run effects of Brexit did not materialize before the new UK-EU trade relationship came into force in 2021.

Suggested Citation

  • Dhingra, Swati & Sampson, Thomas, 2022. "Expecting Brexit," LSE Research Online Documents on Economics 115145, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:115145
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    File URL: http://eprints.lse.ac.uk/115145/
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    More about this item

    Keywords

    Brexit; UK economy; import prices; consumer prices; ES/V004514/1; ES/V007270/1;
    All these keywords.

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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    This paper has been announced in the following NEP Reports:

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