Brexit deal done! A detailed micro- and macroeconomic analysis of its fallout

Abstract

We offer a rich set of macroeconomic and sectoral effects of Brexit in France, together with macroeconomic ones for the UK, the rest of the EU and the rest of the world. We explain the intuition for the impact on production and trade across the 21 sectors that underlie our macroeconomic estimations (national imports and exports, output, GDP, welfare, wages and rental rate of capital). Our comprehensive technique captures the direct and indirect effects of Brexit on trade. Four types of withdrawal are analysed, including the finally agreed between the EU and the UK on December 2020. This will avoid tariffs, but other medium size (non-tariff) barriers will emerge. The UK, France and the rest of the EU will be harmed by Brexit, although asymmetrically. While Brexit will substantially harm the UK economy, the negative impact on France and the rest of the EU will be limited and similar.