Brexit Referendum and Business Investment in the UK

November 21, 2018

Preview Citation

Format: Chicago

Lucyna Gornicka. Brexit Referendum and Business Investment in the UK, (USA: International Monetary Fund, 2018) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

In this paper I apply firm-level analysis to examine how the Brexit process has affected business investment in the UK. An interaction term of potential trade costs after exiting the EU and a measure of firms’ participation in global trade is used as a proxy for firm-level exposure to Brexit-related effects. The results suggest that potential trade costs have had a considerable and statistically significant negative impact on firm investment in the UK after the referendum. At the same time, the post-referendum sterling depreciation has likely contributed positively to investment expenditure by more foreign-oriented firms.

Subject: International trade, National accounts, Private investment, Trade policy

Keywords: Brexit, Brexit process, Brexit referendum, Business investment, Firm, Firm investment, Firm size, Firms' exposure, Global, Investment, Investment decision, Measures of uncertainty, Private investment, Trade cost, Trade costs, Trade policy, UK company, Uncertainty, WP

Publication Details

Pages:

20
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/247
Stock No:

WPIEA2018247
ISBN:

9781484382011
ISSN:

1018-5941

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