The given assignment discusses about Brexit between United Kingdom and European Union. Brexit happens when a country decides to withdraw itself from European Union referendum. According to referendum conducted on 23 June 2016, votes which were in favour of the decision of withdrawal of United Kingdom from European Unionwere of 52%. The given assignment discusses about the economic growth prospectus of Brexit. It also describes about the degrees at which Brexit would open new opportunities for United Kingdom (GC, 2015).
For better understanding to the impact of Brexit on United Kingdom, assignment has thrown some light on some of the major features such as: financial services, immigration, trade policies and many more factors. Brexit has led some advantages as well as disadvantages for United Kingdom as well as European Union; it has also been described in brief. Furthermore it also has been described that how United Kingdom can learn from the Norway and Switzerland experiences. At last the assignment provides some recommendations to United Kingdom for adaptation of such strategy. At last the assignment has provided conclusion part to summarise the Brexit between United Kingdom and European Union in brief (Elliot and Monaghan, 2016).
The decision of United Kingdom to withdraw from European Union has considered as game changer, but the high revenue generating companies has led to increase in the growth. According to GEP (global economic prospectus) the global growth rate has been fallen yearly as forecasted since 2011 (Elliot,2017).The brexit has growth aspect such as: it led to increase in growth aspects by 0.2 to 0.3%. It also helps in reducing the 0.1% in one year. It would also lead to reduction in risk of weaker growth rate in a particular economy and makes effective the credit conditions of the economy. Brexit is usually done to make stabilisation in an economy and to bring market stability.
The impact on United Kingdom depends upon the relationship of United Kingdom with Europe and other countries. The better the relationship between these causes reduction in costs, damages, and managing supply chain management. The major effect of this relationship causes impact over local business and customers (Woodford, 2016).
The brexit has led to improvement in negotiations to get access in specific markets, in terms of standards, and regulations that would be applicable in that sector. The brexit has laid majorly opportunities for managing supply chain. This is because of the reason that the exchange between United Kingdom and Europe was of majorly intermediaries. Hence after brexit, United Kingdomcan be said as efficient in achieving economies of scale, regulating independently, indulging into innovation and competition, increasing the level of productivity in the economy. These are factors which would be considered as opportunities for the economy of United Kingdom after Brexit (Dunford, 2016).
Besides this, brexit also led opportunities in terms of trade in terms of lesser regulations, savings from contributions from European Union, ability to grab the opportunities on new trade policies, migration based policies which are based on skills.
Furthermore, it has been observed by the institute of directors in 2000, that the cost of maintain the membership of European union which cost 1.75% of gross domestic product would lead to decline if there is break in this relationship. Brexit would also lead to saving in the cost arising from harmonisation cost, sharing of pension, euro membership. The sharing cost approximately 3.2% to 3.7% of gross domestic product; hence brexit would led to saving in such costs. It has been estimated by civitas that the recurring annual direct cost would lead to stop occur if brexit would happen. Hence saving in direct cost annually can be considered as an opportunity for United Kingdom Company (Whitman, 2016).
The brexit has led opportunities for United Kingdom in terms of movement of trade and services, people and capital, financial services.It would also lead to improvement in rules and regulations, productivity and innovation, public sector finances, foreign investment, property market and consumption. As a member of European Union, United Kingdom was a trade dealer in all the deals Union negotiates. European Union has 22 trade agreements with other individual countries and with multiple countries. Hence it is an opportunity for United Kingdom that after brexit it would possess the preferential position and would be in a position to negotiate again all the deals with these countries (Jenkins and Agnew, 2016).
The factors of brexit are uncertain; this includes the timing of voting and its outcome. Brexit contains a long process and takes a long time to complete itself (Trade).
The United Kingdom is considered as lack attractive for Europe economy in relation to establish corporate headquarters, and establishing location in United Kingdom.
The economy of United Kingdom has lost its importance in the economy of European Union. This is because of increase in the freedom of United Kingdom to trade independently.
In terms of industrial policy, the United Kingdom has gained a lot of influence over industrial policy. Stillthe economy of United Kingdom lacks in achieving economies of scale and influence in some of the areas of the world economy (The conversation, 2016).
The impact of immigration on United Kingdom is in terms of restricting immigration, disturbing the level of competitiveness in the economy of United Kingdom. These factors had affected majorly the economy of London. But it is not described here that how much affect is due to brexit in the economy (ICAEW).
Though United Kingdom has a competitive position in the world economy but, mostly local and small business has lost their business due to not able to provide services to European markets.
According to World Bank, brexit has led to put risk for trade relations. According to Washington based organisation, 2016 was considered as one of the weakest year. The United Kingdom economy contains less leverage, which has made lesser trade negotiations with United Kingdom. Besides this, this economy faces difficulty in facing trade disputes (Elefteriu, 2016).
In terms of influencing internationally, the United Kingdom has faced difficulties in terms of economic and interest in foreign policies.
Though United Kingdom has gained a lot in terms of finance, but there are not any evidence that how much is from the effect of brexit (EU referendum analysis, 2016).
Brexit is considered as long time taking process, that might takes several years. This causes the uncertainty in terms of impact on business as well as on the economy (Peters, 2016).
The strength of Norway and Switzerland with European Union agreement are as:it has provided freedom to Norway and Switzerland in terms of free movement of services and goods, capital and persons. It also provides them in making flanking policies in terms of competition, social policies, transport, environment, protection, statistics and company law. By this, Switzerland and Norway has able to achieve high degree of common competition rules, economic integration, rules and regulations of state help. Besides this, due to free trade facility as provided in the common agreement, Switzerland, Iceland, Norway can negotiate on free trade agreement with any other third country (Rampen, 2016).
However besides these positive points, the agreement between Norway and Switzerland with the European Union has also led some disadvantages such as: Norway and Switzerland do not have any right to participate in the cooperation of criminal and police justice. It also does not possess any right to participate into decisions over policies of security and EuropeanUnion international. Norway and Switzerland has to ensure the European Union that the domestic laws of their country comply with the European legislations. Hence to comply with this, Norway and Switzerland has to incorporate approximately three quarters of European laws (Campbell, 2017).
United Kingdom can learn from the agreement of Norway and Switzerland with European Union such as: Switzerland has signed a free trade agreement in 2013 with China and Switzerland has also focus on increase the linkages of finances and increase in trade partners. The free trade agreement in Switzerland has led to increase in diplomatic and economic achievements. This has led to increase in building the trade relations with other countries and unions. Hence United Kingdom can learn this to reform its agreement with European Union (Brinded, 2015).
There are no any specific techniques or methodology to measure the exact results of Brexit. However following are some advantages and disadvantages.
Membership in European Unionhas led to many advantages from the exit of United Kingdom. It allows benefits to its member countries such as: huge level of mobility in terms of trade and labour, it also allows resources and people to generate productivity, wealth and prosperity. Hence brexit would lead to saving in such investment. The brexit between United Kingdom and European Union will led to increase in the opportunity to look forward as growing internationally and follow the free trade approach. Besides this, the brexit would lead the European Union to perform the rules and regulation as per their wishes. European Union used to spend 40% of its funds for framing agricultural policies; hence brexit would lead to saving in such expenditures (Giles, 2016).
The European Union consists of many countries, hence after removal of United Kingdom there would be a threat of competitive positions, and threat of losing negotiations with other trade dealers. After brexit, the economic conditions, resources and culture would be affected.The exit of United Kingdom from European Union would lead to affect the economy in adverse manner as 9times. The brexit would affect the mutual relationship between the two independent countries as Europe and United Kingdom. Though brexit would lead to increase in the level of competition, specialisation of trade, forming of new policies; but these are not assured to be achieved by the independent countries, as it may be possible that the results become more adverse. Major exports in European market come from United Kingdom, hence after brexit it would lead to affect the trade relationship and availabilityof resources. The brexit would lead to reduction in income as of £6.883 billion which is to be received from United Kingdom (Atlas network, 2016).
In 2012, after launch of Olympic Games in London, it has able to shaken off the financial capital of Europe. This is because of increase in the diversity, openness, confidence, prosperity due to organising of Olympic Games. London has close economic and cultural connection with Europe. Due to this, approximately 500 large companies, have their headquarters in London. It is a place, where restaurants, bars, shops and tourism are promoted. it has a population of approximately 8 million, the finance does not only controlled by tourism and restaurants but also by leading centre for businesses, education, finances, creative industries and technology. London financial sector as compared to that of European Union has a diversified range of inter linked services, which also cover finances, investment and accountancy, management consultancy, informational technology and communication services. The majority of finance laws belong to London. Hence by this, it is clear that London has a good command over its financial sector as compare to that of European Union. While membership of European Union plays a considerable role in London financial markets (BBC news, 2016).
London has a mass collection of resources in terms of financial and other services; due to which it possess its dominance in the world market. It has been observe that brexit would affect the prosperity of London, but London would not be affected so much by this due to new trading opportunities and creativity in businesses. Though London financial economy is considered as one of the greatest and strongest economy but it lacks in technological world, as Dublin has countered London in case of technology. As a part of European Union, London business finds difficulty in doing operation in United Kingdom market (Talls, 2016).
The Brexit has led to advantages to the United Kingdom in terms of free trade, and policies. But it would lead some disadvantages in terms of political instability, and divisibility by crisis in leadership. The Brexit would also lead to reduction in international stability by losing leverages in European Union membership. By Brexit it would also help United Kingdom in building relationship with other countries. It is clear by the analysis of European Union and United Kingdom economy, that after Brexit, European Union would be lead as largest market of the World, while the European Union would be considered as largest trade partner. But there are no evidences that the three million population of United Kingdom living in the European region. If after Brexit Norway strategy has been adopted it would led to payment of 83% of the European Union budget, it would also require by the United Kingdom to comply with all rules and regulations of European Union. And if, United Kingdom follows Switzerland strategy, it would lead to payment of 40% to European Union, but this would not allow United Kingdom to access the facility of free trade. The brexit has allowed the United Kingdom to negotiate its own deals or trading freely. But as United Kingdom is comparatively small from European region, hence it possesses less bargaining power. The lack of bargaining power would lead to increase in the cost (HM government, 2016).
Conclusion
By analysing over the given assignment it can be said that the Brexit would lead to advantages as well as disadvantages to United Kingdom from separation from European Union. Though the Brexit would lead to some advantages such as facility of free trade, framing of own policies, budget policies, saving in cost and expenditures, compliances of rules and regulations; but it also lead to some disadvantages such as lack of negotiation powers with United Kingdom can lead to weakness for the economy of United Kingdom. By analysing the assignment it is concluded that as United Kingdom has decided to revoke the membership of it with European Union, it should plan and start working to be in a better position to compete with its competitor’s at large level. Though it would not be requiringcomplying with the rules and regulations of European Union but to be at competitive position in the world market it has to make its rules and regulation that can be compatible to match with the worldly rules and regulations.
References
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Elliot, L,. (2017) Trump and brexit put global economic growth at risk, World bank says. Retrieved on 12th March, 2017 from https://www.theguardian.com/business/2017/jan/10/trump-brexit-global-economy-world-bank-2017
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