The Impact of Brexit on UK Firms

Nicholas Bloom, Philip Bunn, Scarlet Chen, Paul Mizen, Pawel Smietanka and Gregory Thwaites

No 26218, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We use a major new survey of UK firms, the Decision Maker Panel, to assess the impact of the June 2016 Brexit referendum. We identify three key results. First, the UK’s decision to leave the EU has generated a large, broad and long-lasting increase in uncertainty. Second, anticipation of Brexit is estimated to have gradually reduced investment by about 11% over the three years following the June 2016 vote. This fall in investment took longer to occur than predicted at the time of the referendum, suggesting that the size and persistence of this uncertainty may have delayed firms’ response to the Brexit vote. Finally, the Brexit process is estimated to have reduced UK productivity by between 2% and 5% over the three years after the referendum. Much of this drop is from negative within-firm effects, in part because firms are committing several hours per week of top-management time to Brexit planning. We also find evidence for smaller negative between-firm effects as more productive, internationally exposed, firms have been more negatively impacted than less productive domestic firms.

JEL-codes: E0 (search for similar items in EconPapers)
Date: 2019-09
New Economics Papers: this item is included in nep-bec and nep-int
Note: IFM ITI LS ME PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (78)

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Working Paper: The impact of Brexit on UK firms (2019)
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