Covid-19 and Brexit hitting different parts of the economy – ESRI
The Economic and Social Research Institute (ESRI) has found there is limited overlap between the parts of the economy most exposed to Brexit and the parts most exposed to the impact of Covid-19.
In a working paper, the ESRI said that if a no-trade deal Brexit were to occur, more companies overall would be faced with a serious risk.
But this would not be due to the interaction of companies between sectors exposed to Brexit and sectors exposed to Covid.
The paper suggested the hospitality and construction sectors are expected to have “almost no impact from Brexit” but are very exposed to Covid.
It said that insurance and the financial services sectors will be the most exposed to Brexit, but are only in the mid-range of impacts from Covid.
The ESRI research found that no sector was found to be in a category of severely exposed to both the Brexit and Covid-19 shocks.
“However, some sectors did fall into the category of being severely exposed to one shock and moderately exposed to the other, a combination that does leave them at some risk if the two shocks are combined,” the think tank cautioned.
Looking at supply chain linkages to examine how sector risks could transmit to suppliers and purchasers more widely, the research also found limited exposure of sectors most impacted by Covid-19 being further hit by Brexit.
“Overall, these findings suggest that adding the Brexit shock to that of Covid-19 brings a wider range of sectors exposed to economic risk but that they do not layer further substantial risks onto those sectors that have already taken the largest Covid-19 hit,” Martina Lawless, author of the report and a Research Professor at the ESRI, said.
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