We analyse the likely trade effects of the Trade and Cooperation Agreement (TCA), which defines the post-Brexit trading environment between the United Kingdom and the European Union. We apply a computable general equilibrium model and focus on trade in value added rather than just the gross values of exports and imports. We describe the TCA and estimate its effects on the costs of conducting UK–EU trade, including various non-tariff barriers in both goods and services. We suggest that the TCA will reduce UK trade significantly: total exports by around 7 per cent and imports by around 14 per cent. In terms of value added (i.e. incomes generated), textiles and vehicles, both of which trade extensively with the EU, suffer heavily, as do services which trade significantly with the EU, face large increases in trade barriers, and experience declining demand from other sectors as those sectors’ exports fall. Such inter-industry linkages spread the losses from Brexit widely through the economy.

Fusacchia, I., Salvatici, L., & Alan Winters, L. (2022). The Consequences of the Trade and Cooperation Agreement for the UK’s International Trade. OXFORD REVIEW OF ECONOMIC POLICY, 38(1).

The Consequences of the Trade and Cooperation Agreement for the UK’s International Trade

Ilaria Fusacchia;Luca Salvatici;
2022

Abstract

We analyse the likely trade effects of the Trade and Cooperation Agreement (TCA), which defines the post-Brexit trading environment between the United Kingdom and the European Union. We apply a computable general equilibrium model and focus on trade in value added rather than just the gross values of exports and imports. We describe the TCA and estimate its effects on the costs of conducting UK–EU trade, including various non-tariff barriers in both goods and services. We suggest that the TCA will reduce UK trade significantly: total exports by around 7 per cent and imports by around 14 per cent. In terms of value added (i.e. incomes generated), textiles and vehicles, both of which trade extensively with the EU, suffer heavily, as do services which trade significantly with the EU, face large increases in trade barriers, and experience declining demand from other sectors as those sectors’ exports fall. Such inter-industry linkages spread the losses from Brexit widely through the economy.
Fusacchia, I., Salvatici, L., & Alan Winters, L. (2022). The Consequences of the Trade and Cooperation Agreement for the UK’s International Trade. OXFORD REVIEW OF ECONOMIC POLICY, 38(1).
File in questo prodotto:
Non ci sono file associati a questo prodotto.

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11590/396867
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus ND
  • ???jsp.display-item.citation.isi??? ND
social impact