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

Version 2 2023-06-12, 08:13
Version 1 2023-06-10, 01:56
journal contribution
posted on 2023-06-12, 08:13 authored by Ilaria Fusacchia, Luca Salvatici, L. Alan Winters
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.

Funding

Post-Brexit trade and investment: explaining the issues, formulating trade agreements and understanding the effect on UK foreign direct investment; G2701; ESRC-ECONOMIC & SOCIAL RESEARCH COUNCIL; ES/T002050/1

History

Publication status

  • Published

File Version

  • Published version

Journal

Oxford Review of Economic Policy

ISSN

0266-903X

Publisher

Oxford University Press

Issue

1

Volume

38

Page range

27-49

Department affiliated with

  • Economics Publications

Research groups affiliated with

  • UK Trade Policy Observatory Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2021-12-06

First Open Access (FOA) Date

2022-02-07

First Compliant Deposit (FCD) Date

2021-12-06

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