The consequences of the Trade and Cooperation Agreement for the UK's international trade

We analyse the likely trade effects of the Trade and Cooperation Agreement (TCA), which defines the post-Brexit trading environment between the United Kingdom (UK) and the European Union (EU). We apply a computable general equilibrium model and focus on trade in value added rather than just the gross values of exports and imports. We describe the TCA and estimate its effects on the costs of conducting UK-EU trade, including various non-tariff barriers in both goods and services. We suggest that the TCA will reduce UK trade significantly: total exports by around 7 per cent and imports by around 14 per cent. In terms of value added (i.e. incomes generated), textiles and vehicles, both of which trade extensively with the EU, suffer heavily, as do services which trade significantly with the EU, face large increases in trade barriers, and experience declining demand from other sectors as those sectors' exports fall. Such inter-industry linkages spread the losses from Brexit widely through the economy.

Automated summary

This study analyzes the Trade and Cooperation Agreement (TCA) between the UK and the EU, and predicts a significant reduction in UK trade and overall economic losses. Particularly, the industries of textiles, vehicles, and services, which are heavily reliant on trade with the EU, are expected to be most impacted due to increased trade barriers.