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Abstract:

cover
CEP Discussion Paper
Brexit: The Economics of International Disintegration
Thomas Sampson
September 2017
Paper No' CEPDP1499:
Full Paper (pdf)

JEL Classification: F1; F5; F6


Tags: brexit; european union; trade agreements; quantitative trade models; globalization

This paper reviews the literature on the likely economic consequences of Brexit and considers the lessons of the Brexit vote for the future of European and global integration. Brexit will make the United Kingdom poorer because it will lead to new barriers to trade and migration between the United Kingdom and the European Union. Plausible estimates put the costs to the United Kingdom at between 1 and 10 percent of income per capita. Other European Union countries will also suffer economically, but their estimated losses are much smaller. Support for Brexit came from a coalition of less-educated, older, less economically successful and more socially conservative voters. Why these voters rejected the European Union is poorly understood, but will play an important role in determining whether Brexit proves to be merely a diversion on the path to greater international integration or a sign that globalization has reached its limits.