The Effects of Brexit on Austria's Economy

This study provides an update on the trade and welfare effects of Brexit for the Austrian and British economy from 2017 ("Estimating the Trade and Welfare Effects of Brexit. A Panel Data Structural Gravity Model"). The estimation relies on a structural gravity model estimated on a disaggregated industry level. The study compares the obtained estimates from the new free trade agreement between the UK and the European Union, which has been agreed on 24th December 2020 with results for an alternative No-Deal-Brexit scenario. The main findings suggest that the free trade agreement is able to mitigate the negative trade and welfare effects from Brexit without being able to fully compensate for all losses. As compared to Austria, the British economy is estimated to face larger negative trade and welfare effects. This effect is most pronounced for the agricultural and the automotive sectors.