Oxera has undertaken an independent review of the likely impact of Brexit on different modes of transport.
Aviation: depending on how quickly aviation agreements could be re-established following Brexit, leaving the EU could restrict operations by UK airlines in Europe and by EU airlines in the UK. This could extend to US airlines (due to the UK exiting the EU–US Open Skies agreement). Our analysis suggests that such a restriction could lead UK passengers’ air fares to rise by
Ports: at present, over 90% of UK trade is handled by ports and the EU is the UK’s largest trading partner. Changes to the costs of trade with the EU are likely to affect the volumes and patterns of freight activity at ports, while the need for new customs checks on imports and exports is likely to cause considerable congestion at UK and mainland European ports. Any negative impact could be mitigated through EEA membership or free trade agreements, although delays in negotiations could mean a significant period trading under World Trade Organization (WTO) agreements. The UK government has estimated that EU membership increases trade with EU members by between 68% and 85% relative to WTO membership.
Rail: removing EU legislation would enable a return to (or at least a trial of) having the same company providing tracks and trains. Currently, the EU’s rail Directives require separation of the two, and the forthcoming Fourth Railway Package will continue the process of separation. Indirect effects of Brexit could also have major implications for the transport sector. For example, Scottish ministers have raised the prospect of a second independence vote following Brexit. Scottish independence could have a significant impact on the operation, regulation and management of the network and train operators, particularly for the 8m cross-border journeys between England and Scotland each year.
Contact: Andrew Meaney