Would a Hard Brexit Cripple the EU’s Digital Economy? Op-Ed by Dean Chakravorti in the Harvard Business Review


Bhaskar Chakravorti is a Senior Associate Dean at The Fletcher School of Law and Diplomacy, Tufts University.

After multiple terror attacks, a snap election with a surprise result, and a devastating fire in London, UK officials had plenty on their minds going into the the start of Brexit negotiations last month. They are tasked with brokering an exit from the EU at the same time that the British economy is showing signs of stress. It was the worst-performer among all advanced economies, with a paltry 0.2% growth in the first quarter of 2017, accompanied by a fall in the value of the pound and rising inflation.

So one might assume that going into the Brexit talks, billed as “the most important negotiations in the country’s history”, the UK is negotiating from a fractured position. As the talks take shape, commentators have even started listing different forms of “national humiliation” for the UK. The presumption is that the UK is weak, while the EU is strong. But that isn’t entirely true — especially if one considers the digital economy.

In the digital economy landscape, the EU would be losing a genuine star. The digital sector is one of the most dynamic and innovative elements of the economies of the UK and the EU – and of countries anywhere; in the UK alone it accounts for 16% of domestic output, 10% of employment, and 24% of exports. As part of the analysis behind our Digital Evolution Index 2017 (we wrote about the broader results of that report here), developed by The Fletcher School and Mastercard, we analyzed how the UK performs relative to its major European peers.

We studied the UK’s performance along four critical dimensions in comparison to the other European counterparts (these include: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and Switzerland). The four dimensions we examined were supply, demand, institutions, and innovation (see the sidebar at left for more on this.)

Read the full op-ed