Trade exposure of the EBRD countries in the EU: Potential value chain disruptions in a no-deal Brexit outcome

By Olivia Riera & Philipp Paetzold

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An EBRD research  published in March 2019 finds that a significant proportion of value chains within the 12 EU countries where the Bank operates, and also in Turkey as a member of the EU Customs Union, could  be affected in an event of an exit of the United Kingdom from the European Union with no deal. A no-deal Brexit could have extensive effects, not only on direct trade between Turkey, the EBRD countries in the EU and the United Kingdom, but also on indirect exports through value chain integration within the European Union. An example of such a value chain would be car parts exported from the Slovak Republic to Germany, assembled there and then exported as a final product to the UK. EBRD economists’ analysis, based on the ’Trade in Value Added’ (2018) OECD database, shows that in the case of the UK leaving the EU under a no-deal scenario, 6.8 per cent of the EBRD countries’ domestic value-added exports would be affected by potential disruptions to direct and indirect trade linkages with the UK.

 

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