Impact of Brexit on Business Investment and Productivity due to Non-Tariff Barriers in the UK
The report titled "DP572: Brexit and Non-Tariff Barriers: Effects on UK Business Investment and Productivity" has been published and can be found in the Topic Hub on Brexit. This research, authored by Dr Ahmet Ihsan Kaya and Professor Stephen Millard, along with external author Hailey Low, delves into the economic impact of Brexit on the United Kingdom.
The study employs a three-country Dynamic Stochastic General Equilibrium (DSGE) model, as well as a Computable General Equilibrium (CGE) model, to simulate the Brexit impact on business investment and productivity within the UK. The simulations were conducted by Alessandro Caivano, Claudia Kanitkar, and Francesco Lippi.
The report finds that Brexit has led to a significant drop in trade between the UK and the European Union. Imports from the EU decreased by 23.7%, and exports by 18.6%. The long-term impact on per capita output is estimated at 1.2% in the model, solely attributed to the rise in non-tariff trade barriers.
Following an initial decline of around 2.5%, business investment gradually recovers but ultimately remains 1.2% lower in the long term. The report falls under the themes of Macro-Economic Modelling and Forecasting and Productivity, Trade, and Regional Economies.
The JEL Code for the report includes C50, C68, E37, and F41. The report's simulations using the National Institute Global Econometric Model, NiGEM, suggest comparable macroeconomic effects. The model accounts for differences in country sizes and tariff and non-tariff trade costs.
For those interested in the details of the report, it can be found in the Topic Hub on Brexit. The paper category number for the report is 572.
