Munich Personal RePEc Archive

Mapping the UK domestic and global value chains from a Brexit perspective

Escaith, Hubert (2018): Mapping the UK domestic and global value chains from a Brexit perspective.

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Abstract

The paper offers background information for a sectoral analysis of the Brexit implications on the UK value chains. It analyses trade data through the specific angle of inter-industrial relation-ships 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 pro-cess, a number of stylised facts are identified and several synthetic indicators are produced. Be-cause 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 con-sideration 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.

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