The local economic effects of Brexit

28 July 2017

This paper studies the local impacts of the increases in trade barriers associated with Brexit. Predictions of the local impact of Brexit are presented under two different
scenarios, soft and hard Brexit.

  • Average effects are predicted to be negative under both scenarios, and more negative under hard Brexit. The spatial variation in shocks across areas is somewhat higher under hard Brexit because some local areas are particularly specialised in sectors that are predicted to be badly hit by hard Brexit.
  • Areas in the South of England, and urban areas, are predicted to be harder hit by Brexit under both scenarios. Again, this pattern is explained by the fact that those areas are specialised in sectors that are predicted to be badly hit by Brexit.
  • Finally, the areas that were most likely to vote remain are those that are predicted to be most negatively impacted by Brexit.

By Dr Swati Dhingra, Professor Stephen Machin and Professor Henry Overman all from LSE’s Centre for Economic Performance (CEP)

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The views expressed in this research paper are those of the authors and not necessarily those of the UK in a Changing Europe initiative.

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