Update: Modelling the short- and long-run impact of Brexit
This NiGEM Observation presents updated estimates of the economic impact of different Brexit scenarios based on analyses recently published by NIESR and building on earlier work on EU withdrawal by the Institute (e.g. Pain and Young, 2004; Ebell et al., 2016). It provides an overview of the assumptions we made when modelling different types of Brexit outcomes, namely continued EU membership, a soft Brexit (continued membership of the EU single market and customs union, the baseline assumption underlying recent NIESR forecasts), a UK-EU customs union, and an orderly no deal Brexit. References to recent more comprehensive reports by NIESR motivating the economic rationale behind the modelling assumptions in more detail are included.
The Observation proceeds by first focussing on the long-run economic impact of different Brexit scenarios. It then discusses the options for policymakers to respond to a no-deal Brexit in the short run presenting scenarios in which policy reacts in an accommodative way.