ABSTRACTWe study the impact of Brexit uncertainty on one of the most important forms of corporate investment: mergers and acquisitions (M&As). Brexit provides us with an ideal natural experiment to explore the real effects of economic uncertainty and understand the underlying transmission mechanism. We document a significant decline in the number of M&A deals for UK firms after Brexit compared to EU firms. This inhibiting effect is amplified by the channels of real options, foreign trade, and financial constraints. Overall, our results provide for deeper understanding of this unprecedented uncertainty in Brexit policy on local M&A activity. Policy makers are urged to respond.

The perception of Brexit uncertainty and how it affects markets

This paper examines the impact of Brexit-related uncertainty on the UK’s trade in services, with a focus on how different types of international business policy uncertainty (IBPU) influence export participation and intensity. Leveraging a novel conceptual framework, we integrate multiple layers of uncertainty—including regulatory, legal, and market-based factors—into an analysis of UK firms’ strategic decisions in an open economy. Drawing on firm-level data from Bureau van Dijk’s Orbis database and a synthetic control method, we estimate that Brexit uncertainty led to a 9.2% annual reduction in UK services exports, equivalent to a cumulative loss of USD 146.8 billion between 2016 and 2019. Our findings show that Brexit-related uncertainty disproportionately affected small and medium-sized enterprises (SMEs), while multinational enterprises (MNEs) were more likely to relocate operations outside the UK, exacerbating trade declines. This research highlights the critical role of transparent and predictable regulatory frameworks, risk management policies, and transitional support measures to mitigate the adverse effects of prolonged uncertainty. By identifying the specific mechanisms through which uncertainty shapes export decisions, this study offers key insights for policymakers aiming to foster resilience in the UK’s services trade post-Brexit.

This study investigates the impact of Brexit uncertainty on the UK's services sector trade from 2016 to 2019 revealing a statistically significant negative impact that varied across sectors and destinations. Using the OECD-WTO Balanced Trade in Services dataset and synthetic difference in differences methodology, the findings indicate an annual shortfall of US$23.7/£18.5 billion in UK services exports compared to a scenario where the UK remained in the EU, translating to a 5.65 percent reduction. The bilateral data suggests an 8.5 percent average decline, with larger exports to countries like Germany and the US being less affected than smaller bilateral exports. The UK bilateral exports to the EU declined by 6.21 percent, while Ireland’s exports expanded by 21.4 percent. The study highlights that small firms were disproportionately impacted, leading to a decline in trade openness and export activities. Methodological sensitivity is underscored, with various approaches estimating Brexit’s impact differently. Sectoral analysis shows significant declines in Travel, Insurance, Finance, Telecom, Business and Cultural Services. Ireland notably benefited post-Brexit, experiencing a 14.75 percent annual increase in services exports due to business relocations. The study emphasizes the critical yet underexplored consequences of economic disintegration on international trade in services, providing essential evidence for future UK-EU trade relations post-Brexit.

Abstract This study examines the impact of Brexit on investor reactions to Environmental, Social and Governance (ESG) events in UK companies. Post‐Brexit, investors show reduced sensitivity to ESG incidents, suggesting relaxed corporate accountability for ESG disasters. We observe varied investor responses to different ESG events, with most having less financial influence after Brexit. This research informs regulators, stakeholders and policymakers in the post‐Brexit era, emphasising the need for strong ESG regulations and communication in influencing investor behaviour. It contributes to understanding the relationship between regulatory changes, corporate reputation and investor reactions post‐Brexit.

The repeated risk of the so-called hard Brexit created great uncertainty about the future of mutual EU-UK trade relations. In 2020, the uncertainty was exacerbated by the COVID-19 global pandemic. These critical situations affected the EU's external trade and, in particular, the EU export capacity. Therefore, in addition to the standard factors, such as GDP, labour productivity or the presence of the FTA determining EU exports, this paper examines those factors that were relevant for EU export between 2016 and 2020, i.e. the uncertainty stemming from Brexit and the global COVID-19 pandemic. Fixed and time effects panel data analysis combined with the difference in difference method and a Poisson pseudo-maximum likelihood estimator were used. The negative impact of Brexit uncertainty on EU exports has not been proven. The COVID-19 pandemic, which caused a deep downturn in international trade in 2020, had a negative impact on EU exports. However, EU exports to all partners decreased significantly regardless of the COVID-19 prevalence. This study updates the literature on the nexus between uncertainty and trade by examining the recent critical factors affecting EU export developments.

The Perception of Brexit Uncertainty and How it Affects Markets

The Perception of Brexit Uncertainty and How it Affects Markets

ABSTRACTWe propose a text‐based method for measuring the cross‐border propagation of large shocks at the firm level. We apply this method to estimate the expected costs, benefits, and risks of Brexit and find widespread reverberations in listed firms in 81 countries. International (i.e., non‐U.K.) firms most exposed to Brexit uncertainty (the second moment) lost significant market value and reduced hiring and investment. International firms also overwhelmingly expected negative first‐moment impacts from the U.K.'s decision to leave the European Union (EU), particularly related to regulation, asset prices, and labor market impacts of Brexit.

Political referenda and investment: Evidence from Scotland

Abstract Brexit exposed the UK to substantial policy uncertainty that could affect the performance and behavior of British firms. We examine the impact of Brexit as an exogenous shock to policy uncertainty on real activities manipulation by British firms. Using several measures of real activities manipulation and a difference-in-differences design, we compare the earnings management of firms most adversely affected by Brexit uncertainty (affected firms) to other firms. Our results indicate that the affected firms exhibit higher real activities manipulation after the Brexit vote and we also find that they demonstrate similarly higher accruals management. Our findings suggesting that policy uncertainty induces the costly practice of real activities manipulation are relevant to various stakeholders including policymakers and financial statements users.

Abstract The paper addresses the impacts of political exits on the dividend policy, taking the impact of the Brexit deal on UK’s companies listed at FTSE 100 as a practical case. The paper analyzes the political risk and uncertainty of Brexit and links it directly to the dividend policy of UK companies during the period (2010-2021). Data were collected from the annual reports of the companies from the FTSE 100 data base. Moreover, dividend policies were studied through analyzing its determinants such as dividend payout ratio, leverage, profitability, tangibility, liquidity, size and political factor – Brexit. A regression analysis was adopted to analyse and interpret the variables for the UK companies and notice the impact of the Brexit deal on the dividend policies. Therefore, the results show that there is a direct relation between political exits and corporate financial policies, especially dividend policy. Also, the results show that the financial ratios differed between the two periods (before and after) Brexit, where it seems that the dividend policy variables were affected starting from mid of 2016 due to Brexit referendum and then the political negotiations between the two parties during the period (2016-2021). In addition, the correlation matrix shows that DPR has a negative linear correlation with profitability, liquidity and size where it seems that DPR has a positive linear correlation with leverage, tangibility, and political factors. Moreover, our results show that political uncertainty and instability were affecting the FTSE 100 performance starting from 2016 due to Brexit related events.

This paper evaluates the impact of Brexit-related uncertainty on the economies of the UK, EU, and the US. We propose a measure of Brexit uncertainty that has not been employed before in the literature. We first construct a binary variable by selecting Brexit-related events. We subsequently employ the Qual VAR model of Dueker [2005. “Dynamic Forecasts of Qualitative Variables: A Qual VAR Model of US Recessions.” Journal of Business & Economic Statistics 23: 96–104] to transform this variable to a continuous latent variable that captures uncertainty on important economic and financial variables. Next, this latent variable enters a structural Factor-Augmented Vector AutoRegression model combined with 452 macro and financial variables for the sample countries. Overall, our results indicate that the prolonged period of uncertainty, had a positive effect on the economies of major EU countries and negative effects for the UK economy. Additionally, the UK is the most important net sender of uncertainty spillovers in the EU, while Germany and France are among the most important net receivers of uncertainty shocks.

Abstract This study used textual analysis of 34,209 news articles to quantify news sentiment into three main clusters—positive, negative and neutral—before analysing how they co‐move with international equity indices, using the time‐varying connectedness of Diebold and Yilmaz (2009, 2012). Better understanding of the spillover of news sentiment to stock markets could aid the decision‐making of institutional investors when strong uncertainty is present across major economies. We found that limited spillover from news sentiment to equity markets existed for both the European and international indices examined in the analysis, with spillover being stronger among smaller subsets of news articles more relevant for financial market participants. Additionally, the results indicated that, in the full sample, directional spillover was especially strong in times of larger uncertainty concerning BREXIT developments, whereas the smaller subsets, although also displaying stronger spillover during BREXIT uncertainty, revealed additional spillover peaks at times less related to major BREXIT developments. Differentiation between news about UK‐based and EU‐based companies also showed less spillover from news sentiment regarding EU‐based companies, possibly implying that investors saw BREXIT developments as less relevant for the latter.

This paper offers a detailed review of the UK’s trade performance during the COVID‐19 crisis and reflects on how this may be revived. During 2020, UK goods exports contracted more sharply than those of its international peers. Statistics suggest that UK had a deeper decline and slower recovery than Germany, Italy, Spain and the US. Further, the trends from 2017 to 2019 show a weakening in the UK’s global competitiveness, suggesting a more persistent development against the backdrop of productivity slowdown and Brexit uncertainty. We analyse the confluence of internal and external factors that impact on UK trade and emphasise the importance of boosting productivity in the recovery from the COVID crisis and Brexit.

With the ‘Troubles’, Northern Ireland has long reflected the problems of divided societies due to the presence of competing nationalisms. The deep divisions caused by the civil war and political stalemate could only be surmounted by the introduction of a European solution negating the binary and diametric opposition between Protestants and Catholics, unionists/ loyalists and nationalists/ republicans. Though many issues continued to affect Northern Ireland and its society, the 1998 Good Friday Agreement and its consociational power-sharing institutions managed to bring peace to the country within the EU framework. Recently, however, Brexit and the reestablishment of borders between the UK/ Northern Ireland and the EU (and thereby Ireland) are posing new challenges, reintroducing jingoistic and narrow- minded nationalist thinking. This article presents the development of the Northern Ireland issue, focusing on the impact of Brexit on the peace process in recent years and, in particular, exploring its effects from the perspective of identity and security.

The objective of this research is to give recommendation for a bakery chain operator called Greggs in terms of improving their breakfast menu selection to generate more sales. The research method uses SWOT analysis to produce a strategic development plan. Greggs is one of the largest United Kingdom bakery stores and performs well in generating revenue as the turnover. The uncertainty of Brexit, the minimum wage set by the government, the highest proportion of people who usually eat breakfast on the go, development of a mobile app, breakfast preference to a healthier fresh meal and reduce sugar consumption, competitor, extreme winter weather, and the government policy have an impact on Gregg revenue. Based on the SWOT analysis result it can be concluded that Gregg needs to utilize the position as the market leader to promote the benefit of high-quality healthy food, use the revenue to start on research for healthy products innovation, use the healthy breakfast trend to introduce vegan breakfast menu, add more drink option for the breakfast deal to make it more convenient for people to commute, keep focusing on the quality and taste development with a competitive price, add more menu that correspondent with consumer demand, and try to efficiently spend the revenue based on priority to cut operating cost.

Abstract Given uncertainty in policy, particularly around Brexit, how do private equity (PE) firms investing in the UK behave? Analysing their response is vital for understanding the impact on investment per se and designing policy that limits uncertainty. Building on the recent work of Mike Wright and co‐authors, we explore the effect of uncertainty measures on UK PE activity and the channels that transmit uncertainty to the PE market. After developing hypotheses that link the ‘PE activity and uncertainty’ relation via a real options, interim risk or moral hazard channel, we employ a novel dataset on PE targets and non‐targets over the 2010–2019 period. We find that uncertainty, especially new measures closely aligned to Brexit, have negatively affected PE activity in the UK. Moreover, the transmission of such uncertainty occurs primarily through the real options channel and through greater uncertainty arising from prolonged interim periods of PE deals (i.e. the interim risk channel). Our results imply that the present and ongoing uncertainty in Brexit policy will continue to depress PE activity and by extension, investment and growth in the UK. Policymakers are urged to resolve such uncertainties.

Since the 2008 economic and financial crisis, the rise of populism and nationalism has been associated with increased protectionism and policy uncertainty in the world trade system, with profound side effects for international business (IB) activities and global value chains (GVCs). The aim of this paper is to investigate the way trade policy uncertainty linked to Brexit has affected firms’ behaviors along the GVC of the UK textile and apparel (T&A) industry. We draw upon data from an original survey carried out between June 2019 and January 2020 with 688 firms amongst UK T&A manufacturers, designers, and retailers to grasp their perception of Brexit uncertainty. We show that the uncertainty over trade policy between the UK and the EU – started in the wake of the 2016 referendum – has affected a significant number of firms operating upstream and downstream of the UK T&A value chain, which shows clear signs of ongoing restructuring. Our findings also provide some preliminary evidence of the way the (perceived) effects of trade policy uncertainty may vary depending on firms’ position, production phase, and degree of integration in the GVC. Policy directions for supporting the UK T&A value chain post-Brexit and implications for future IB research are discussed.

The perception of Brexit uncertainty and how it affects markets