Brexportgeddon?

While a major market for UK exports, the EU is not quite as significant as the headline statistics suggest and one which is likely to continue declining in relative importance. The static tariff cost of a worst‐case ‘Brexit’ is estimated to be around ¼% of GDP, a modest sum. But the dynamic cost could be higher. And certain industrial sectors look vulnerable, notably aircraft and chemicals where sales to the EU account for over 40% of total (domestic and overseas) demand and EU tariffs are relatively high. Moreover, exports to the EU would also face non‐tariff barriers, which would be of particular relevance for the services sector. That services firms export much more to the rest of the world than to the EU suggests that they are well versed in overcoming such barriers. But financial services would face particular risks from Brexit.