The trade impact of the UK’s exit from the EU Single Market
This paper quantifies the sectoral trade impact in the United Kingdom and in EU countries
of the UK’s exit from the Single Market, using the OECD general-equilibrium METRO
model. A comprehensive free-trade agreement could lead to a fall by about 6.1% of
UK exports and 7.8% of UK imports in the medium term compared to a situation where
the United Kingdom would stay in the Single Market. Cost would come essentially from
rising technical barriers and sanitary and phytosanitory measures on goods and rising
trade costs on services. Rules of origin and border transition costs would have a
small effect. Output losses in the European Union (0.4-0.5%) are expected to be less
pronounced, but would vary markedly across individual countries. Ireland would experience
the largest losses. Losses would also vary across sectors. Accounting for the regulatory
impact of ending free movement of people for EU nationals on services trade is expected
to bring some additional costs to the services economy. Those losses could be partly
compensated by growth-enhancing changes to UK regulations, but only to a limited extent.
Published on November 23, 2020
In series:OECD Economics Department Working Papersview more titles