Thomas Prayer on his project with the Bank of England

ERSC DTP Student, a Faculty of Economics student, worked with the Bank of England on research project entitled “Unravelling Deep Integration: UK Trade in the Wake of Brexit”

I wanted to work at the Bank of England because it is one of the most important economic policy institutions in the UK and an internship at the Bank offers a unique glimpse into the world of economic policy. The project was an aspect of the Bank’s work where my research interests and expertise overlapped with the Bank’s agenda, and our goals were aligned. I was hoping the company would provide me with research guidance and the opportunity to collaborate.

I spend my first week settling into the new environment and familiarising myself with the systems and operations of the Bank of England and started working independently in my second week.

My experience of working with people from different backgrounds was amazing. I learned a lot about research from the economists and academics on my project and got a variety of new perspectives from my other colleagues at the Bank working on separate but related issues.

I had four aims for this internship:

1. First and foremost, I wanted to get 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.
2. Second, I wanted to contribute to a research project relevant to both the Bank of England and my broader research agenda, and to produce a working paper of sufficient quality to pursue publication.
3. My third aim was to improve my academic, collaborative and communication skills 
4. My fourth aim was to expand my network and meet and interact with a range of people interested in economics and economic policy.

The most valuable aspect of the internship, for me, is that I met non-academic supervisor from the Bank of England. I feel I have gained a real friend and mentor. On top of that, I got clarity about what I want for my career, and upskilled in a lot of areas, including research and presentation, but also teamwork, time management and communication. The internship directly contributed a working paper to my research portfolio and 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.

This project studies 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 internship 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. Working together with them, and especially with my supervisor Rebecca, really helped me to improve my research skills, especially with regard to data cleaning, analysis and visualization. Finally, we also did produce a working paper, which is about to be published in the CEP working paper series, among others.

The main output of my time at the Bank of England is a working paper, which is now about to come out, as well as two presentations, particularly my final presentation of our work and findings to economists from all over the Bank. 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 Bank measured my impact in terms of my contribution to the research output of our project, and my supervisor assessed my work with the head of the Global Structural Policy Team, in line with the Bank’s policy, at the end of my internship.

In terms of hard skills, my work on sourcing, cleaning and analyzing data on trade flows and trade policy introduced me to coding in Python and mata in Stata, and to the data visualization capabilities of that software. Drafting our working paper helped me to improve my LaTeX skills. I also had an opportunity to work on my soft skills, particularly my teamwork, communication, and presentation skills, during our weekly project meetings and my final presentation.

With regard to experiences, the most valuable takeaway is a sense of the day-to-day operation of an institution like the Bank of England.
The advice I’d give to prospective applicants to the Grand Challenges Scheme is to make sure you get everything in writing and do not rely on verbal agreements. (NB: CGC helps with contracts, funding and agreements for your internship)

Thomas Prayer’s placement with the Bank of England took place between September 2021 – March 2022