The third in a series of Brexit reports from the Centre for Economic Performance (CEP), examines how leaving the EU would affect UK incomes through changes in foreign investment in the UK. Leaving the European Union (EU) would reduce flows of foreign direct investment (FDI) into the UK by more than a fifth, damaging productivity and lowering people’s incomes. Cars and financial services – two important UK industries – would receive less investment from foreign firms that use the UK as a base to access EU markets. And the UK’s ability to negotiate concessions from regulations on EU-related transactions would be seriously eroded. Overall, incomes could fall by about 3.4% just from lower foreign investment.

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Swati Dhingra, Gianmarco I. P. Ottaviano, Thomas Sampson and John Van Reenen

15 April 2016     Paper Number CEPBREXIT03

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This CEP Brexit analysis is published under the centre's Trade programme, Growth programme.