10 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.
Our estimates are conservative. They suggest that failing to secure a close trading relationship with the EU will give the UK economy a shock equivalent to losing a total of about 750,000 jobs (only about half the value implied by the government’s own estimates of 28th November). We find that, while those job losses will tend to be concentrated in cities and large towns, the people whose jobs they are, tend to live over much larger surrounding areas.
Presenting Brexit effects by area of residence is important because people typically spend more where they live than where they work. This means that the impact of Brexit on any constituency is captured more appropriately by studying the possible job losses among residents of that constituency rather than among workers in that constituency. Once we look at Brexit on a residence basis, we see that its economic costs are less concentrated but far more widespread than one would guess from the pattern of employment around the UK in terms of workplaces. While 269 constituencies will suffer shocks equivalent to losing more than one thousand jobs on a workplace-basis, 398 will do so on a residence-basis.
Constituency-level results are particularly important at present because Parliament, and hence the views of individual MPs, will play a key role in making Brexit decisions as part of the imminent ‘meaningful vote’. Our results will help MPs and the people who vote for them to gauge, albeit approximately, one aspect of their economic interest in the outcome of Brexit.
The complete set of results that measure the Brexit shock in terms of possible job losses among workplaces and residents of the 632 parliamentary constituencies in Great Britain, along with a more detailed discussion of them, is available is this note. We give results for a ‘no deal’ Brexit and a ‘soft’ Brexit which assumes that the UK maintains much closer links with the EU economy.
This study is a follow-up to our recent analysis of the impact of Brexit on the 34 parliamentary constituencies in Hampshire and Sussex published on 21 November 2018. That publication explains exactly how the estimates are derived and how to interpret them.
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