Faculty of Economics innovation Fellow, worked with the Bank of England on research project entitled “Unravelling Deep Integration: UK Trade in the Wake of Brexit”

Hands-on experience of the work done by economic policy analysts and researchers at the Bank of England, a leading central bank and hub of economic policy analysis in the UK.

This project eplored the impact of the UK’s withdrawal from the EU on UK trade with the EU relative to UK trade with the rest of the world. We find no evidence that uncertainty and anticipation effects led to a significant decline in relative UK trade with the EU during the period after the UK voted for Brexit in 2016 and before the change in policy was implemented under the new Trade and Cooperation Agreement in 2021. However, the UK’s departure from the EU’s single market and customs union at the start of 2021 caused a major shock to UK-EU trade.  We estimate that the new TCA trade relationship led to a sudden and persistent 25% fall in relative UK imports from the EU. In contrast, we find a smaller and only temporary decline in relative UK exports to the EU, but nevertheless a large and sustained drop in the extensive margin of exports, driven by the exit of low-value relationships. The timing and asymmetry of Brexit effects on UK imports and exports is puzzling and provides evidence of important differences in adjustment to integration and disintegration shocks.

 The Innovation Fellowship was a great way to learn about the day-to-day work of a researcher at the Bank of England, and to make a decision about the best path for my future career, so it certainly met my main aim. I met a lot of researchers and economists with overlapping research interest and had the opportunity to get an entirely different perspective on my work. 

The main output of my work at the Bank of England is a working paper. Our work shows that the UK’s withdrawal from the EU had a pronounced effect of relative import values from the EU, as well as on the relative number of import and especially export relationships the UK has with EU partners, which fell dramatically, particularly for the UK’s smaller European partners. In some cases, the number of export relationships fell by more than 75% in January 2021, after a decade of steady growth, and did not recover.

The project helped me improve my other research projects by adding to my research skills. The biggest contribution to my future career, however, was the mentorship I received and the clarity in my own mind about what career path I want to follow.

 Special thanks to  the Bank of England – Global Structural Policy Team.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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