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Image of Alan Winters10 December 2018

L. Alan Winters CB, Professor of Economics and Director of the UK Trade Policy Observatory 

The Brexit Withdrawal Agreement and the Political Declaration are being presented as a means to end the uncertainty about the UK’s future relationship with Europe. But in an explainer for the ESRC’s UK in a Changing Europe, Professor L Alan Winters argues that this is not the case. Uncertainty will continue regardless of what happens to the Withdrawal Agreement.

Briefly, he argues that, if the Withdrawal Agreement is approved by Parliament and the EU:

  • The backstop it mandates requires a customs union between the UK and the EU and that most EU regulations for goods will apply in Northern Ireland. However, there is no regulatory alignment between the rest of the UK and the EU and so, if the backstop came into operation, there would be border formalities both in the Irish Sea and as UK goods entered the EU via any other route.
  • Negotiating a trade agreement with the EU will take a lot longer than the 21 months allowed for it in the Withdrawal Agreement, not least because every EU member state has a veto over trade agreements.
  • The Political Declaration that defines the parameters for that negotiation is imprecise in critical places and is, anyway, non-binding.

However, neither would rejecting the Withdrawal Agreement resolve the uncertainty. There is a wide range of possible outcomes all but one of which impose serious economic harm and/or require further negotiation. The option that involves least uncertainty and cost would be to remain within the EU; however, trying to achieve that outcome involves both significant political risks and the risk of ‘no deal’ if the attempt failed.

‘Through a glass, darkly’ is biblical – 1 Corinthians 13:12 – and is interpreted as meaning that we can see only imprecisely and via a mirror, but that, in the end, all will become clear. Seems about the best we can hope for.

Read the full article, What are the options for the UK’s trading relationship with the EU after Brexit?

December 10th, 2018

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Image of Alan Winters10 December 2018

L. Alan Winters CB, Professor of Economics and Director of the UK Trade Policy Observatory and Ilona Serwicka is Research Fellow in the economics of Brexit at the Observatory.

Today we are publishing a study of the economic impact of ‘no deal’ and ‘soft’ Brexit scenarios on the 632 Parliamentary constituencies in Great Britain. It shows that calculating the effect of Brexit on the residents in an area gives a very different perspective from the more common calculation based on the jobs in that area.

For example, a ‘no deal’ Brexit would imply a shock equivalent to losing some 42,400 jobs in the parliamentary constituency of Cities of London and Westminster. However, 41,250 of these jobs are held by people who live elsewhere. At the other extreme, Streatham may suffer a loss equivalent to 650 of its jobs, but around 2,250 of Streatham’s residents would lose their employment. (more…)

December 10th, 2018

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30 November 2018

L. Alan Winters CB, Professor of Economics and Director of the UK Trade Policy Observatory, Dr Michael Gasiorek, a Senior Lecturer in Economics at the University of Sussex and Peter Holmes, Reader in  Economics at the University of Sussex both fellows of the UK Trade Policy Observatory.

  • We welcome the Government’s estimates of the economic consequences of alternative Brexits. They are way overdue.
  • The modelling was very competently done.
  • But the assumptions made tended to favour the Government’s preferred position over other alternatives.

On Tuesday, the UK Government released a set of cross-Departmental estimates of the possible economic costs of different Brexit options. They were based on the Government’s own modelling, which uses a technique known as a Computable General Equilibrium modelling and is based on the Global Trade Analysis Project (GTAP) consortium’s world model and dataset. The aim is to model (very approximately) the important linkages in an economy over a medium to long-term horizon and to assess the possible impact of changes in trade policy on the economy. (Short-term modelling, over a five year period, was simultaneously released by the Bank of England, but we do not discuss it here). The modelling approach is relatively standard, has been applied competently and honestly and produces results fairly much in line with other studies of the impact of Brexit.

This blog highlights some of the trade-related aspects of the modelling exercise and its results. As with all modelling, the main issues concern the assumptions that users input into the model rather than the model itself. (more…)

November 30th, 2018

Posted In: UK - Non EU, UK- EU

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Photo of Emily Lydgate21 November 2018

Dr Emily Lydgate is a lecturer in Law at the University of Sussex and a fellow of the UK Trade Policy Observatory.

Even if the draft Withdrawal Agreement is ultimately rejected, it provides more clarity on what the European Union (EU) and the United Kingdom (UK) want in future relationship negotiations. Notably, it has prompted the EU to develop its call for a ‘level playing field’ in the areas of environmental and labour standards, State Aid and competition policy into a set of binding commitments now agreed by the UK Government. This blog examines the requirements for environmental standards and regulation. The EU has already indicated that it will seek ‘Level Playing Field’ commitments in any agreement, including a ‘Canada-style’ deal. These environmental commitments will likely comprise a minimum standard that the EU will require in any negotiated future relationship. (more…)

November 21st, 2018

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Image of Alan Winters21 November 2018

L. Alan Winters CB is Professor of Economics and Director of the UK Trade Policy Observatory. Ilona Serwicka is Research Fellow in the economics of Brexit at the Observatory

A ‘no deal’ Brexit could cost the jobs of up to 43,000 Sussex and Hampshire residents with around one in 40 of all jobs of residents within the 34 parliamentary constituencies at risk if there is no deal, our latest Briefing Paper – The Brexit burden: A constituency level analysis for Hampshire and Sussex  – reveals.

Even a soft Brexit, such as detailed in the current Withdrawal Agreement agreed by Cabinet last week, will have a significant negative impact on Hampshire and Sussex and could lead around 20,000 jobs being lost across these counties.

(more…)

November 21st, 2018

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16 November 2018

Alasdair Smith is an Emeritus Professor of Economics at the University of Sussex and is a member of the UK Trade Policy Observatory.

The UK Cabinet has signed off the draft EU Withdrawal Agreement (WA) and the Political Declaration (PD) about the future UK-EU trade relationship. The WA has had such a rocky reception in the Conservative Party that the future path of decision-making is a bit uncertain, but it is likely that these documents will also be agreed by the EU summit later this month. The decision-making then passes one way or another to the UK Parliament. Politics has dominated this week’s debates, but decisions need to be informed by economic assessment. Let’s consider the economic costs and benefits of the choices which Parliament will have to make.

(more…)

November 16th, 2018

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7 November 2018

Rodney D. Ludema is a Professor of Economics, with a joint appointment in the School of Foreign Service and the Department of Economics at Georgetown University, Washington D.C. (See bio below)

As the fifth meeting of the U.S. and U.K. Trade and Investment Working Group takes place this week in Washington, hope for an eventual U.S.-U.K. trade deal is on the rise, thanks to the White House’s recent notification to Congress of its intent to launch formal negotiations. This new optimism is astonishing in light of Trump’s protectionist moves of the past year and raises questions about the direction of U.S. trade policy more generally. Should Trump’s free trade overtures be taken seriously? Do they represent a change in strategy or even a change in tactics? How ambitious should we expect a U.S.-U.K. trade deal to be? To answer these questions, it is helpful to understand Trump’s motivations and the policy environment in which his policies are being developed.  Such is the goal of this essay. (more…)

November 7th, 2018

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Erika Szyszczak6 November 2018

Professor Erika Szyszczak is a Research Professor in Law and a fellow of the UK Trade Policy Observatory. She was the Specialist Adviser to the House of Lords European Union Committee Inquiry: Brexit: competition and state aid

On 30 October 2018, the Government revealed its plans on how competition law will continue to operate in the scenario where the UK and the EU are unable to reach an amicable separation agreement – the so-called ‘no deal’ scenario where there is no future EU-UK trade agreement in place. This Blog comments on the expected increase in the workload of the Competition and Markets Authority after Brexit and the proposed new, autonomous approach to competition policy where Regulators and courts will no longer be under an obligation to follow EU competition law. (more…)

November 6th, 2018

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31 October 2018

Ilona Serwicka, Research Fellow in the economics of Brexit at the UKTPO and Nicolo Tamberi, Research Assistant in Economics for the Observatory.

Our latest research finds that overseas investment to the UK may be some 19 per cent lower because of the vote to leave the EU. Despite a buoyant 12 months for the world economy in 2017, inflows of Foreign Direct Investment (FDI) to the UK have continued to decline since reaching a peak in 2015. (more…)

November 1st, 2018

Posted In: UK - Non EU, UK- EU

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17 October 2018

Dr Michael Gasiorek is a Senior Lecturer in Economics at the University of Sussex and a fellow of the UK Trade Policy Observatory.

UK-EU negotiations are in a mess. There appears to be a genuine impasse, where the stumbling block is the issue of no border in Ireland. The EU has indicated it is for the UK to make a better offer, while the UK is arguing that the EU needs to be more reasonable.  Both are right, if they want to avoid ‘no deal’. (more…)

October 17th, 2018

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