Minneapolis Fed Research: The Impact of Brexit on Foreign Investment and Production

02 February 2017

Authors found a significant fall in foreign investment and production by UK firms, and a small but positive welfare gain for UK citizens.

Following the Brexit, the United Kingdom increases international lending, which finances the production of others, both domestically and abroad. In the European Union, declines in investment and production are modest, but the welfare of non-U.K. citizens is lower. If, during the transition, the United Kingdom reduces current restrictions on other major foreign investors, such as the United States and Japan, domestic production and investment in the United Kingdom fall by less, and the welfare of U.K. citizens rises by more.

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