Going Global? Firms, Trade and Productivity After Brexit

Lead Research Organisation: London School of Economics & Pol Sci
Department Name: Centre for Economic Performance

Abstract

Brexit is the biggest change to the UK's external relations for at least a generation. Leaving the EU will lead to the introduction of new barriers to trade between the UK and the EU, while also creating opportunities for the UK to develop its own independent trade policy. This project studies the impact of Brexit on the UK's trade and economic performance. The analysis will consider how the UK economy is changing in response to Brexit and will provide estimates of the effect of Brexit on productivity, trade, output, wages and living standards.

A key contribution of the research will be the creation of a new dataset matching trade and production data at the firm level. Using this dataset, the project will analyse which firms, workers, regions and industries are most exposed to Brexit, how Brexit affects firms' participation in the global economy, whether COVID-19 alters how firms respond to Brexit and how changes in trade impact firm performance and productivity. The project will also develop a trade model of the UK economy to quantify the aggregate economic consequences of Brexit and evaluate alternative post-Brexit trade policies.

The project's findings will help policy makers and the general public understand the economic consequences of Brexit and will inform debate on UK trade and economic policy after Brexit. For example, the project will shed light on the costs and benefits of alternative trade agreements with the EU and other partners; what types of trade barriers are most important for UK firms, and; how the effects of Brexit differ across workers, firms, regions and industries.

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