Abstract
Brexit has been and continues to be a huge economic burden for the UK economy and its partners. We estimate that the Eurozone as a whole missed around EUR60bn of potential outlets on the UK market since the Brexit vote. It may take a last minute decision to avoid the costs of a hard Brexit, which are significant and underestimated by many prominent proponents of Brexit. In our view, a “no deal Brexit” would trigger two consecutive years of recession in the UK and cut Eurozone growth by at least −0.5 pp. per year. A “no Brexit deal” would have strongly negative repercussions for the UK’s trading partners, especially for Germany. Exports in EUR terms fell by almost −6% in 2016–17 cumulated (or EUR5bn in value terms) and export losses should reach EUR8bn per year in a “no Brexit deal” scenario. The type of a Free Trade Agreement between the UK and the EU is most essential in the long run. We estimate UK growth to average 1.5% over the transition period, half of the 2000–07 average for example.
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Heise, M., Boata, A. Economic costs of Brexit. Int Econ Econ Policy 16, 27–30 (2019). https://doi.org/10.1007/s10368-018-00428-9
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DOI: https://doi.org/10.1007/s10368-018-00428-9