Post-Brexit no-trade-deal scenario: short-term consumer benefit at the expense of long-term economic development
- After the United Kingdom has left the European Union it remains unclear whether the two parties can successfully negotiate and sign a trade agreement within the transition period. Ongoing negotiations, practical obstacles and resulting uncertainties make it highly unlikely that economic actors would be fully prepared to a “no-trade-deal” situation. Here we provide an economic shock simulation of the immediate aftermath of such a post-Brexit no-trade-deal scenario by computing the time evolution of more than 1.8 million interactions between more than 6,600 economic actors in the global trade network. We find an abrupt decline in the number of goods produced in the UK and the EU. This sudden output reduction is caused by drops in demand as customers on the respective other side of the Channel incorporate the new trade restriction into their decision-making. As a response, producers reduce prices in order to stimulate demand elsewhere. In the short term consumers benefit from lower prices but production value decreases with potentiallyAfter the United Kingdom has left the European Union it remains unclear whether the two parties can successfully negotiate and sign a trade agreement within the transition period. Ongoing negotiations, practical obstacles and resulting uncertainties make it highly unlikely that economic actors would be fully prepared to a “no-trade-deal” situation. Here we provide an economic shock simulation of the immediate aftermath of such a post-Brexit no-trade-deal scenario by computing the time evolution of more than 1.8 million interactions between more than 6,600 economic actors in the global trade network. We find an abrupt decline in the number of goods produced in the UK and the EU. This sudden output reduction is caused by drops in demand as customers on the respective other side of the Channel incorporate the new trade restriction into their decision-making. As a response, producers reduce prices in order to stimulate demand elsewhere. In the short term consumers benefit from lower prices but production value decreases with potentially severe socio-economic consequences in the longer term.…
Author details: | Leonie WenzORCiDGND, Anders LevermannORCiDGND, Sven N. WillnerORCiDGND, Christian OttoORCiD, Kilian KuhlaORCiD |
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URN: | urn:nbn:de:kobv:517-opus4-525819 |
DOI: | https://doi.org/10.25932/publishup-52581 |
ISSN: | 1866-8372 |
Title of parent work (German): | Postprints der Universität Potsdam : Mathematisch-Naturwissenschaftliche Reihe |
Publication series (Volume number): | Zweitveröffentlichungen der Universität Potsdam : Mathematisch-Naturwissenschaftliche Reihe (1208) |
Publication type: | Postprint |
Language: | English |
Date of first publication: | 2019/11/08 |
Publication year: | 2020 |
Publishing institution: | Universität Potsdam |
Release date: | 2021/11/17 |
Tag: | chains; costs; impact; model; origins |
Issue: | 9 |
Article number: | e0237500 |
Number of pages: | 16 |
Source: | PLoS ONE 15(9): e0237500. https://doi.org/10.1371/journal.pone.0237500 |
Organizational units: | Mathematisch-Naturwissenschaftliche Fakultät / Institut für Physik und Astronomie |
DDC classification: | 5 Naturwissenschaften und Mathematik / 53 Physik / 530 Physik |
Peer review: | Referiert |
Publishing method: | Open Access / Green Open-Access |
License (German): | CC-BY - Namensnennung 4.0 International |
External remark: | Bibliographieeintrag der Originalveröffentlichung/Quelle |