Brexit and its Effects on EU–UK Trade and Investment

Details

Supervisors

Defrainge Jean-Christophe

Faculty

Louvain School of Management

Degree label

Master de spécialisation en entreprises et politiques économiques européennes

Abstract

enBrexit represents a major transformation of economic relations between the United Kingdom (UK) and the European Union (EU), changing the institutional conditions that previously supported close trade and investment integration. The study examines how Brexit has affected EU–UK trade and investment by analysing structural, sectoral, and strategic changes from 2012 to 2025. It focuses on changes in trade patterns, investment flows, regulatory divergence, supply chains, and firm-level responses following the 2016 referendum and the implementation of the Trade and Cooperation Agreement (TCA). The study adopts a sequential explanatory mixed-methods design. Quantitative analysis examines changes in trade volumes, composition, sectoral patterns, and foreign direct investment (FDI), while qualitative analysis examines regulatory developments, sector-specific effects, and firm-level responses. The analysis is guided by the gravity model of trade, institutional economics, the political economy of regional integration, and the trade–FDI relationship. The findings show that Brexit has created persistent non-tariff barriers, increased trade and compliance costs, and produced uneven effects across sectors and EU member states. It has also contributed to changes in investment patterns and encouraged firms to adapt through supply-chain restructuring, market diversification, regulatory adjustment, and relocation. These developments indicate a more fragmented economic relationship between the UK and the EU. The thesis contributes to the understanding of Brexit by bringing together trade, investment, institutional, sectoral, and firm-level perspectives. It provides evidence-based insights for policymakers, businesses, and researchers on how institutional changes affect cross-border economic relations. Overall, the study concludes that the economic effects of Brexit are ongoing and will continue to evolve as the UK and EU adjust their trade, regulatory, and investment relationships.