Mapping the UK Domestic and Global Value Chains from a Brexit Perspective

Hubert Escaith
2018 Social Science Research Network  
This paper aims at offering background information for a sectoral analysis of the Brexit implications on the UK value chains. It analyses trade data through the specific angle of interindustrial relationships and international supply chains, including employment implications. The paper benchmarks UK against other key G-20 countries for three specific industries that have a particular relevance from an inter-industrial perspective: Transport equipment, Chemicals and Electronics. In the process,
more » ... number of stylised facts are identified and several synthetic indicators are produced. Because a hard Brexit is expected to increase trade costs and affect prices, the paper estimates the impact of additional tariff and non-tariff trade costs on the competitiveness of these three sectors. Hopes that a devaluation of the Pound may compensate for higher trade costs must take into consideration that devaluation affects only the domestic share of the value-added, requiring larger exchange rate adjustment. In the case of Transport equipment, the required devaluation is around 30% if all tariff and non-tariff trade costs are passed to the producers. JEL codes: C43, C67, F14, F15, O50
doi:10.2139/ssrn.3212163 fatcat:mxjdmnnniffpvk6cvgdnmc3xrq