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  Post-Brexit no-trade-deal scenario: Short-term consumer benefit at the expense of long-term economic development

Wenz, L., Levermann, A., Willner, S., Otto, C., Kuhla, K. (2020): Post-Brexit no-trade-deal scenario: Short-term consumer benefit at the expense of long-term economic development. - PloS ONE, 15, 9, e0237500.
https://doi.org/10.1371/journal.pone.0237500

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Item Permalink: https://publications.pik-potsdam.de/pubman/item/item_24363 Version Permalink: https://publications.pik-potsdam.de/pubman/item/item_24363_3
Genre: Journal Article

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 Creators:
Wenz, Leonie1, Author              
Levermann, Anders1, 2, Author              
Willner, Sven1, Author              
Otto, Christian1, Author              
Kuhla, Kilian1, 2, Author              
Affiliations:
1Potsdam Institute for Climate Impact Research, ou_persistent13              
2Universität Potsdam, ou_persistent22              

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 Abstract: After the United Kingdom has left the European Union it remains unclear whether the two parties can successfully negotiate and sign a trade agreement within the transition period. Ongoing negotiations, practical obstacles and resulting uncertainties make it highly unlikely that economic actors would be fully prepared to a “no-trade-deal” situation. Here we provide an economic shock simulation of the immediate aftermath of such a post-Brexit no-trade-deal scenario by computing the time evolution of more than 1.8 million interactions between more than 6,600 economic actors in the global trade network. We find an abrupt decline in the number of goods produced in the UK and the EU. This sudden output reduction is caused by drops in demand as customers on the respective other side of the Channel incorporate the new trade restriction into their decision-making. As a response, producers reduce prices in order to stimulate demand elsewhere. In the short term consumers benefit from lower prices but production value decreases with potentially severe socio-economic consequences in the longer term.

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 Dates: 2020-07-272020
 Publication Status: Finally published
 Pages: -
 Publishing info: -
 Table of Contents: -
 Rev. Type: Peer
 Identifiers: PIKDOMAIN: RD4 - Complexity Science
Research topic keyword: Economics
Research topic keyword: Complex Networks
Research topic keyword: Nonlinear Dynamics
Research topic keyword: Sustainable Development
Regional keyword: Europe
Regional keyword: Germany
Model / method: Acclimate
Model / method: Agent-based Models
Organisational keyword: RD4 - Complexity Science
MDB-ID: yes - 3036
DOI: 10.1371/journal.pone.0237500
 Degree: -

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Title: PloS ONE
Source Genre: Journal, SCI, Scopus, p3, OA
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Pages: - Volume / Issue: 15 (9) Sequence Number: e0237500 Start / End Page: - Identifier: CoNE: https://publications.pik-potsdam.de/cone/journals/resource/r1311121
Publisher: Public Library of Science (PLoS)