The Brexit Agreement shows that most of the previously considered soft Brexit scenarios were overly optimistic. In fact, the while the tariffs will remain zero in UK-EU trade, the NTBs may emerge due to divergence of regulations and the border checks and health inspection may add to the border costs of trade. We have therefore updated our simulations to consider the content of the agreement and also look at the possible directions of UK’s trade policy with respect to third countries.
We have presented these results at the ASSA 2021 conference, January 3-5 2021.