2016年-世界发展银行全球_Trade_and_Investment_Implications_of_Brexit_17页_671kb

Summary of Trade and Investment Implications of Brexit

Core Content

Brexit, the UK's withdrawal from the European Union, is expected to have significant implications for trade and investment flows, both for the UK and for countries with large exposure to it. The impact depends on the type of trade relationship negotiated with the EU, the duration of the negotiations, and the level of market confidence during the transition period. The World Bank Group emphasizes the role of international development institutions in informing policy debates on these implications.

Main Points

1. Impact on Trade

• Trade Patterns:

  • The UK is a major global player, with 4% of global GDP and strong trade links with the EU.
  • The EU accounts for 50% of UK trade and over 40% of value added in UK exports.
  • The UK's services trade, especially financial services, is significant, with 37% of total exports and 23% of total imports.
  • The majority of UK services are imported from non-EU countries, notably the US (29%).

• Global Value Chains (GVCs):

  • The UK is highly integrated in GVCs, with 41% of its export value added coming from the EU and 12% from the US.
  • About 59% of UK intermediate goods imports come from EU PTA members, with Germany and France as the largest sources.
  • Similarly, 56% of UK intermediate goods exports go to other EU PTA members.
  • The US is the main destination for UK exported value added, while Germany and France are the main importers of UK intermediate goods.

• Trade Exposure:

  • Emerging and developing economies in Eastern and Central Asia (ECA) and Sub-Saharan Africa (SSA) have the largest trade exposure to the UK.
  • Countries with high trade exposure include Hungary, Poland, Czech Republic, South Africa, Nigeria, and some Caribbean nations.

• Trade Policy Uncertainty:

  • Brexit may reduce the depth of UK trade agreements and increase policy uncertainty.
  • The UK may need to renegotiate all its trade agreements with third countries, leading to potential shifts in trade relations.
  • The UK's access to the EU single market and the implications for its trade policy could affect trade flows and investment decisions.

• Trade Scenarios:

  • The Norway scenario involves UK membership in the EEA, granting access to the single market but not the customs union.
  • The Swiss scenario involves bilateral treaties with the EU, leading to less economic integration.
  • The Free Trade Agreement (FTA) scenario allows the UK to negotiate independently, but may result in lower trade integration.
  • The No-agreement/MFN scenario reverts to WTO rules, potentially reducing UK access to EU markets.

• Impact on EU and Other Countries:

  • Brexit-induced recession could negatively affect EU trade and investment flows.
  • EU member states with the highest exposure are Hungary, Poland, Czech Republic, Ireland, Netherlands, and Cyprus.
  • Non-EU countries with high exposure include South Africa, Nigeria, and the Caribbean.

2. Impact on Investment

• Foreign Direct Investment (FDI):

  • Brexit may negatively affect inward FDI, particularly from EU-based firms.
  • In the long term, FDI flows could be disrupted due to changes in the UK's institutional structure and its relationship with the EU.
  • The UK is a significant destination for FDI from developing countries, with $83.2 billion received since 2003.

• Investment Policy Changes:

  • The UK may need to re-negotiate existing EU trade and investment agreements, leading to uncertainty for investors.
  • The EU currently has comprehensive trade agreements with 52 countries and is negotiating with 72 others.
  • Brexit could affect the UK's participation in ongoing EU investment negotiations, such as TTIP, EU-Singapore, and EU-Vietnam.

• Short-Term and Long-Term Effects:

  • Short-term effects may be mitigated by the pound's devaluation, but long-term effects are more concerning.
  • Efficiency-seeking FDI is likely to be affected due to uncertainty in market access.
  • Market-seeking and natural resource-seeking FDI could also decline as the UK economy shrinks and market fragmentation occurs.

• Legal and Regulatory Uncertainty:

  • UK outward investments in EU member states may face legal uncertainties post-Brexit.
  • The UK's position in global value chains and its role in the EU's investment framework are at risk.

3. Policy Implications

• Need for Clarity:

  • The UK and its trade partners need clarity in trade relations to minimize uncertainty.
  • Freezing current rules and commitments in preferential and WTO agreements could help stabilize the situation.

• Renegotiation Challenges:

  • Renegotiating trade agreements will take time and may result in legal and regulatory uncertainty.
  • Maintaining the depth of trade agreements is more efficient but politically challenging.

• Global FDI Resilience:

  • Global FDI is resilient, but Brexit could reduce investor confidence.
  • A surge in M&As in 2015 was a key factor in global FDI growth, but these do not necessarily translate into increased productive investment.

Key Information

• The UK's trade and investment relationships are deeply embedded in the EU's framework, which includes not only tariffs but also rules on competition, investment, and capital movement.
• The UK's trade with the EU accounts for a large share of its total trade, with services and intermediate goods being major components.
• The UK is a key player in global value chains, and its exit from the EU may lead to a reconfiguration of these chains.
• The impact of Brexit on trade and investment varies depending on the trade agreement scenario, with the Norway scenario being the most favorable and the MFN scenario the most adverse.
• Countries with high exposure to UK trade include those in ECA, SSA, and the EU.
• Brexit could lead to a shift in FDI flows, with firms relocating to other EU financial centers or countries with more stable trade relations.
• The UK's role as a financial hub may be diminished, with Frankfurt and Paris possibly benefiting.
• The UK's FDI from developing countries is significant, and its attractiveness may be reduced due to uncertainty in EU access.

Conclusion

Brexit represents a major shift in the UK's economic integration with the EU and has the potential to disrupt trade and investment flows significantly. The implications extend beyond the UK to other countries, particularly those in ECA and SSA, which have substantial trade and investment linkages with the UK. The outcome will depend heavily on the type of trade agreement negotiated and the level of confidence in the UK and EU's leadership during the transition. International institutions like the World Bank Group play a crucial role in analyzing and advising on these impacts.