chapter  8
14 Pages

The Economic Consequences of Brexit

A brief overview of the literature
WithBruce Morley

Following the vote to leave the European Union in 2016, there has been a great deal of debate on how the relationship between the UK and EU should develop and the economic consequences of leaving. The analysis of the potential impact of Brexit on the UK and EU economy and its security has taken many forms, with an emphasis on simulations and the effects on trade, in particular based on gravity model type approaches. Along with this macroeconomic approach, some studies have assessed the effects on individual industries, such as the financial sector, especially the regulatory framework after Brexit. The results of the analysis tend to be mixed, although mostly they indicate a negative overall effect on trade and output. However, it is difficult to say with certainty what the repercussions of the decision to leave will be, as there is no precedent to base the analysis on.