Abstract
Investigating the effects of Brexit on firms’ innovation behavior is pivotal to understand future possible economic growth and welfare effects of such policy decisions in the UK. By applying a difference-in-difference (DID) methodology on a sample of 2846 firm-year observations from 2013 to 2018, we address this question observing a decrease in UK firms’ research and development expenses compared to European firms. Specifically, we observe an R&D decrease of UK firms of about 10%, and of about 1.3% compared to EU firms. Our results offer important evidence for policymakers and UK regulators, warning on the future detrimental impact of Brexit on UK firms’ innovation policies.
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