The real effects of Brexit on labour demand

The implementation of Brexit produced markedly different experiences for Northern Ireland, which effectively remained within the EU’s Single Market for goods, and the rest of the UK. This column exploits this contrast to investigate the impact of Brexit on UK firms. Firms located further from the Irish border, and thus more exposed to the full economic consequences of Brexit, experienced significantly greater negative effects, reducing their workforce by up to 15.7% relative to less exposed firms. These firms also reported lower growth expectations but increased investment in R&D. Importantly, firms with prior international trade exposure could mitigate these adverse effects better. The findings emphasise the critical roles of trade integration and innovation in firms’ adaptation to Brexit-induced disruptions.