The Economics of Brexit

Revisited

verfasst von: Philip B. Whyman, Alina I. Petrescu

Verlag: Springer International Publishing

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

The Economics of Brexit – Revisited builds upon and extends the analysis contained within the authors' previous book, The Economics of Brexit: A Cost-Benefit Analysis of the UK's Economic Relationship with the EU, which arguably represented the most comprehensive and systematic evaluation of the UK’s economic relationship with the EU. The Economics of Brexit – Revisited continues where the previous volume left off, given that the UK has now formally withdrawn from the EU, and therefore the focus of the evidence presented concerns the potential economic implications arising from Brexit and considering the options available to those negotiating the UK's future economic relationship both regionally and globally. The Economics of Brexit – Revisited seeks to provide greater clarity to a range of issues that have been hotly debated over the past few years, ranging from the trade and fiscal implications of Brexit, to the economic impact of regulation and migration. The significance of different Brexit options are discussed in detail, including the significance of demands for regulatory harmonisation (the 'level playing field'), along with their implications for UK trade with the EU and the rest of the world. A wide range of economic analyses are evaluated to determine their relative methodological strengths and weaknesses, and ultimately whether their conclusions are sufficiently robust to engender confidence. Finally, noting that a key determinant of the effectiveness of any post-Brexit economic strategy depends upon the degree of flexibility created for economic policy, the book provides an extended examination of the potential relating to different economic policy options available to the UK government, depending upon the form of final trade settlement that is agreed with the EU. These policy options include more active forms of macroeconomic management, combined with industrial and procurement policy. The Economics of Brexit – Revisited therefore seeks to combine evaluation of the available evidence indicating the economic impact of Brexit, together with consideration of policy trade-offs that lie at the heart of the choices surrounding Brexit, and how these might be resolved.

The Economics of Brexit – Revisited therefore maintains its position as the most comprehensive analysis of the economics of Brexit in the market today.

Inhaltsverzeichnis

Frontmatter

Chapter 1. The Elusive Economic Consensus over Brexit

Abstract

This chapter examines the range of studies that have been produced to predict the likely economic impact of Brexit. It considers the suggestion that a broad consensus exists amongst economists, that Brexit would prove damaging to the UK economy, and notes that this claim was based primarily upon a small sub-set of studies rather than reflecting the more complicated range of forecasts produced by economists more generally. This chapter examines the methodologies adopted by this group of more influential studies and highlights a number of flaws which have weakened the robustness and reliability of their conclusions.

Philip B. Whyman, Alina Ileana. Petrescu

Chapter 2. The Fiscal Impact of Brexit

Abstract

The fiscal impact of Brexit is an area where even detractors concede that the UK will gain from withdrawal from the EU, as smaller (if any) contributions will be made to cover the UK’s share of EU programmes. The precise nature of this fiscal benefit is, however, uncertain. This is partly due to the way in which the EU budget is only finalised ex post facto, as relative gross national income only becomes known after the fact, whilst prior commitments are often only realised into payments after a time lag. Calculations additionally depend upon assumptions related to the UK budget rebate and whether gross or net contributions are used in calculations, or additionally, whether EU or UK Treasury figures are deemed to be the most appropriate for the particular application of the data. Future budgetary developments need to be estimated, for any comparative forecast to be accurate, and the final form of trade agreement reached with the EU will have a significant effect upon the size of fiscal gain, as some of the options contain fiscal payment implications. The size of the financial settlement is broadly known, albeit that aspects will remain indeterminate for a number of years. Finally, this chapter notes that whilst potentially significant, the direct fiscal gain from Brexit is likely to be relatively modest when compared to any impact upon GDP (and thereby overall fiscal balance) arising from Brexit’s broader economic impact.

Philip B. Whyman, Alina Ileana. Petrescu

Chapter 3. Brexit and Trade

Abstract

The impact of Brexit upon trade has been the primary concern for most economists since the lowering of trade barriers and resulting reductions in trade costs are viewed as overwhelmingly positive. The economic theory relating to trade integration and growth is considered, before noting the results of those studies which have sought to estimate the impact of EU membership over time. One conclusion drawn from the evaluation of the evidence is that trade integration would appear to have positive economic results, but that the UK has had a much lower rate of benefit than other EU member states, perhaps due to the fact that most of its exports are destined for other parts of the globe and hence it is less tightly integrated into the European market. Potential effects arising from the re-imposition of tariff and non-tariff barriers are examined, noting that different sectors are likely to experience quite different effects. Finally, the conclusions reached by a range of studies into the possible trade effects of different variants of Brexit are examined and broad conclusions reached.

Philip B. Whyman, Alina Ileana. Petrescu

Chapter 4. Foreign Direct Investment (FDI) After Brexit

Abstract

The inflow of foreign direct investment (FDI) is typically associated with a range of economic benefits, ranging from enhanced technological and innovation spillovers, which may in turn have positive productivity and employment effects, to offsetting the immediate balance of payments effects caused by the UK’s large trade deficit. The chapter examines the theoretical determinants of FDI flows and seeks to place the impact of Brexit into context. It notes the FDI performance of the UK, both prior to the 2016 referendum, and in the short time period thereafter, before assessing the evidence presented concerning the possible effect that Brexit may have upon future FDI. Evidence is gleaned from economic studies but also attitude surveys conducted with international investors. The policy response to international investor concerns is considered, and since the UK car industry has been identified as having particular exposure to Brexit, this industry is discussed in a little more detail.

Philip B. Whyman, Alina Ileana. Petrescu

Chapter 5. Regulation

Abstract

Regulation has been identified as one area where Brexit may deliver economic benefits. Sections of business opinion have long criticised the EU for the negative impact of its regulations upon the business community, and therefore the chapter examines the potential for a shift towards national rather than supra-national regulation to deliver economic gains. Evidence is presented relating to the relative ranking of UK regulatory burdens, and that the vast majority of UK firms do not export to other EU member states and yet remain constrained by single market regulations. The chapter evaluates the evidence, produced by a handful of studies, which have sought to contrast the economic cost-benefit rations produced by national as opposed to EU regulations, before considering policy responses in the form of significant regulatory liberalisation (‘Singapore on Thames’), gains that might be made through repatriation of certain regulations and the significance of the choice facing UK negotiators, concerning whether to pursue regulatory divergence or concede EU demands for regulatory compliance (the so-called level playing field).

Philip B. Whyman, Alina Ileana. Petrescu

Chapter 6. Migration

Abstract

One of the key areas of concern for the UK has been its high net migration. Insights into understanding migration, its motivations and impact are assessed, alongside a brief presentation of UK immigration statistics, its poor image in the public eye and the persistent UK labour market inequality. Migration can have a positive or negative impact for the UK as a whole and also for particular indigenous groups, depending on the economic aspect analysed. Therefore, understanding the evidence in relation to migration is important, as this is highly significant for deciding which form of Brexit to favour. The effect of migration is discussed in relation to many key economic aspects for the UK, including demographics, jobs, business and sectors of activity, skill levels, wages, employment, fiscal contributions, housing and, quintessentially, productivity. The design of a post-Brexit migration system is analysed, comparing it mainly to the Australian points-based visa system, and its consequences for UK business and productivity are summarised alongside recommendations—principally related to the need for its flexibility—aimed at addressing some of UK employers’ major concerns of skill shortages and the economy suffering post-Brexit. Migrant labour can make a positive contribution to our nation if government, business and the research community work together to help design a migration policy appropriate to our country’s needs.

Philip B. Whyman, Alina Ileana. Petrescu

Chapter 7. Economic Growth and Productivity

Abstract

One of the more contested elements of economic analyses of Brexit impact concerns productivity and growth effects. This chapter examines the proposition that there is a link between openness and growth, alongside competition and productivity. It questions whether openness is acting as a proxy for other factors, such as economies of scale and the rate of capital formation, which can be influenced by other determinants, such as the level and growth of aggregate demand. This chapter examines the question of whether EU membership reversed what was perceived at the time of accession to be the UK’s relative decline, and it examines how the UK’s current large trade deficit might constrain growth rates.

Philip B. Whyman, Alina Ileana. Petrescu

Chapter 8. Economic Policy After Brexit

Abstract

One area almost completely ignored by economic studies, and yet which has possibly the greatest potential to influence whether Brexit will ultimately be viewed as a policy success or failure, concerns the flexibility of UK policy formation. Depending upon the final form that Brexit takes, it has the potential to present policy makers with additional policy instruments which are not currently available and which have the potential to transform the national economy. Active forms of industrial and procurement policies are the most obvious examples and are examined in some detail in this chapter. Similarly, this chapter discusses macroeconomic options to reduce uncertainty and provide a solid foundation to encourage higher rates of investment and capital formation than have been the norm in the UK for decades.

Philip B. Whyman, Alina Ileana. Petrescu

Chapter 9. Alternative Trading Models After Brexit

Abstract

The book concludes by examining the alternative trading models that have been advanced for Brexit. These range from close forms of relationship with the EU, such as membership of the European Economic Area (EEA) or customs union, or more independent options, such as concluding a free trade agreement (FTA) with the EU or alternatively trading according to World Trade Organisation rules. Additional trade options are considered, such as membership of the European Free Trade Association, increasing trade with the Commonwealth, North American Free Trade Agreement and ‘Anglosphere’ countries, or joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). There is a fundamental choice facing policy makers—whether to seek to minimise short-term trade costs through the adoption of a close economic relationship with the EU, but at the cost of inhibited policy autonomy, or to utilise policy flexibility to pursue national economic objectives, but at the cost of short-term reduction in UK-EU trade. Rodrik’s trilemma model is used to illustrate this choice, between adopting a ‘golden straightjacket’ and opting for the benefits of greater national sovereignty and policy space. The chapter explains and evaluates the Chequers (May) and Johnson variants of the withdrawal agreement, before noting how game theory might suggest a mutually beneficial bargaining solution between the UK and the EU—based around a basic form of FTA.

Philip B. Whyman, Alina Ileana. Petrescu

Correction to: The Economics of Brexit

Philip B. Whyman, Alina Ileana. Petrescu

Backmatter

Titel: The Economics of Brexit
verfasst von: Philip B. Whyman
Alina I. Petrescu
Verlag: Springer International Publishing
Electronic ISBN: 978-3-030-55948-9
Print ISBN: 978-3-030-55947-2
DOI: https://doi.org/10.1007/978-3-030-55948-9