The consequences of the Trade and Cooperation Agreement for the UK’s international trade

Fusacchia, Ilaria, Salvatici, Luca and Winters, L Alan (2022) The consequences of the Trade and Cooperation Agreement for the UK’s international trade. Oxford Review of Economic Policy, 38 (1). pp. 27-49. ISSN 0266-903X

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We analyse the likely trade effects of the Trade and Cooperation Agreement (TCA), which defines the post-Brexit trading environment between the United Kingdom (UK) and the European Union (EU). We apply a computable general equilibrium model and focus on trade in value added rather than just the gross values of exports and imports. We describe the TCA and estimate its effects on the costs of conducting UK–EU trade, including various non-tariff barriers in both goods and services. We suggest that the TCA will reduce UK trade significantly: total exports by around 7 per cent and imports by around 14 per cent. In terms of value added (i.e. incomes generated), textiles and vehicles, both of which trade extensively with the EU, suffer heavily, as do services which trade significantly with the EU, face large increases in trade barriers, and experience declining demand from other sectors as those sectors’ exports fall. Such inter-industry linkages spread the losses from Brexit widely through the economy.

Item Type: Article
Schools and Departments: University of Sussex Business School > Economics
Research Centres and Groups: UK Trade Policy Observatory
SWORD Depositor: Mx Elements Account
Depositing User: Mx Elements Account
Date Deposited: 06 Dec 2021 08:31
Last Modified: 03 Mar 2022 12:33

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Project NameSussex Project NumberFunderFunder Ref
Post-Brexit trade and investment: explaining the issues, formulating trade agreements and understanding the effect on UK foreign direct investmentG2701ESRC-ECONOMIC & SOCIAL RESEARCH COUNCILES/T002050/1