Impact of Brexit on the UK economy is uncertain and in long run, economic outlook may change. In this research proposal, the aim is to identify the impact of Brexit on the UK economy. It could be possible that Brexit could negative impact on the job creation and growth of the UK economy. There are certain benefits of the UK from the Brexit also, freedom of trade deals, immigration policy, lower regulations, saving of the people’s purse. In short-term basis, the issue of foreign direct investment impact on the property business and logistics business cannot be postulated. In this research proposal, objectives will be set and literature review will be done based on the secondary data. A research methodology will be provided in order to collect the data.
Leading economists and surveys have been showing that Brexit will reduce the UK’s per-capita income. Current GDP of the UK is $2.629 trillion and GDP growth has been slowed due to the Brexit. Moreover, the inflation rate is increasing by 3% in the UK (Adler-Nissen et al. 2017). Inflation surge can hurt the consumers as jump of inflation can destroy the spending power of the customers. The economic factors of one country can affect the outcome like GDP, capital formation, agriculture and annual growth of the UK. Moreover, exports and imports are essential for a country to become steady in economy. In the UK, the exports in 2016 were $412.1 billion it became lower by2% from 2014. In addition, the import in the UK was $581 billion in 2016 and it is decreasing from 2014 (Theguardian.com 2017). In the UK, trading can affect the national treasury in the economy. Pounds were becoming weak and weak pound increased the bottom line of the foreign organisations and made them weak in stock prices. Brexit lowers the flow of money that the market utilises. The main criterion of this research is to check all the factors that can affect the relationship of the UK with other European countries.
Concept of Brexit
The British people voted for exit of Britain from the EU (European Union) in a referendum in 2016 on 23rd June. This outcome was a celebration for the Eurosceptics; however, the global economy faced the utter shock. After the referendum, the pound reached to the lowest level and David Cameron resigned from the post of Prime Minister. In the referendum bill, under Article 30, the UK has to leave the EU by the end of 2019. Theresa May has been planning to leave the EU’s market to gain the control over supremacy of EU’s laws and immigration policy. After the Brexit shock, the UK lost its topmost post AAA credit rating (Dhingra and Sampson, 2016). The Bank of England cut the interest rates and the UK is planning to make new trade agreements.
The reason behind leaving the EU was leaving the single market economy and the people of the UK wanted to increase the export through custom union. However, most of the economists think that being in the policy of EU provided positive effect on the UK’s trade, leaving the EU may impact negative on the UK. There could be various changes from the UK’s government side, either the government can make a free trade agreement with EU or the UK can make the trade rules among all the World Trade Organisations (WTO) members (Pisani-Ferry et al. 2016). The cost of lowered the economic growth for the UK was around £75 billion and the economists think that trade deals could make up the gap.
Figure 1: The UK Government’s borrowing
(Source: Theguardian.com 2017)
When the UK was a part of the EU, most of the foreign companies saw EU as the gateway of EU countries to invest and market. The foreign companies allured for Foreign Direct Investment in the UK and after doing the business in the UK, most of the companies start to invest in the EU market. The UK took the benefits of this and the UK was the major recipient of FDI. In the previous time, the UK was second largest in inward investment and it was almost 7% of the global economy. As opined by Lim (2017), after the Brexit, the Foreign Direct Investment (FDI) may face issue; however, some of the economists think that the UK’s economy will remain same after the Brexit.
Figure 2: UK exports by destinations
(Source: Bbc.com 2017)
After the Brexit, London Stock Exchange saw the rapid downfall from 6338 to 5805.13 in the very first ten minutes. This could be equated to the 3% of close trading and FTSE predicted a steady decline of the stock market. The stock market decreases amounted to 3 trillion USD by the next two days. The decline had been steady and it resulted from almost 14% in next 14 days. Brexit made the 10% down of the pound compared to the US dollar and pound performed the worst against other 31 major currencies (bbc.com 2017). Gini coefficient has been slowed down by 0.32%.
The Brexit referendum created uncertainty for the businesses as the businesses have a trading relationship with the EU based countries and investing in EU based countries became the challenge for the organisations. The pound became weaker and most of the business firms have been facing the issue of lower economic growth of the UK. The firms have been facing the issues of supply chain and logistics as the trading among the EU countries is now challenging. Weaker pound opened up the trading of pharmaceutical industries, professional services, defence firms and aerospace industry (Alhajji 2017). The UK also faced the recession in early 2017 due to the reduction of global firms’ investment.
The capital need of the financial institutions is is 10 times higher than the Brexit as Brexit can impact on high liquidity assets. The UK based banks raised almost £120 billion and this can provide the flexibility to the bank to do the market operations (Partington 2017). Bank of England wants to provide additional funding of £260 billion to the banks to maintain the liquidity.
Primary question
Aim:
The aim of this research is to explore the impact of Brexit decision on the UK economy
Objectives:
To analyse if the UK economy is affected by leaving the European Union
To identify the balance of trade’s situation of UK
To explore the UK’s position in the business interrelations between different country
To explain if this affects the international market, stock market and foreign direct investment situation
Research philosophy
Research philosophy is an idea about which data is collected, analysed and used. Research philosophy is three types, positivism, realism and interpretivism (Hair 2015). In this research project, I will select the positivism philosophy.
Positivism philosophy is concerned about knowledge in objective perspective and positivism philosophy collects the data in a scientific way. The data about the impact of Brexit on the UK economy is comprised of both qualitative and quantitative; therefore, the positivism philosophy can help in subjective analysis.
Research strategy helps the researcher to investigate the issue of the research. It is the general plan of the researcher to identify the process of the research questions to answers. In this research, I will collect only secondary data and the approach is taken for this research is archival research. This strategy of the research will be based on the historical data sources and data will be collected from the reliable sources. The strategy of the research will be based on the objectives of the research.
The approach is a plan or procedure that comprise with the steps to gather the data with broad assumptions. Research approach helps the researcher to collect the data in detailed method and interpret the data with analysis (Bryman 2015). There are mainly two types of research approach, inductive approach and deductive approach.
In this research, I will select deductive approach because deductive approach tests the theories of research topics. In this study, I will select the secondary data collection method and in investigating the secondary data, the deductive approach will help in the structural presentation of the data. I already have enough information regarding the Brexit and deductive approach goes from theoretical perspective to observation and then to confirmation of the theory.
The research design is the overall strategy to gather the data for the research though compiling different components in a coherent and logical ways (McMillan and Schumacher 2014). Research design always ensures that research problem should be addressed and it makes the blueprint to collect the data. There are three types of research design, exploratory, explanatory and descriptive.
In this research project, I am going to select the exploratory research design. . Exploratory research is mainly concerned with the issue of the research that has not been studied in a clear way (Clemence et al. 2014). Exploratory research does not provide any conclusive evidence and it can clearly define the problem of the research. Moreover, the exploratory research can help me to define the initial research ideas of Brexit in hypothetical manner. Impact of Brexit on the UK economy cannot be declared in certain way as it is yet to discover by the economists.
There are two types of data, primary and secondary. In this research topic, I am going to take the secondary data collection technique as it will help me to collect the data from various government reports, newspapers, journals, websites, organizational reports, books and articles. Brexit is a burning issue in the UK, there are various economic blogs that have been releasing news and public opinions of this. As stated by Flick (2015), secondary research, the main advantage is resource implication that is usually easier to gather than primary data. Secondary data is unobtrusive and it is based on a longitudinal study. The secondary data are quality and performance data. The available data will be reviewed from different sources and authentic websites will be used to gather knowledge about different political, legal and sociological factors in UK economy.
In order to analyse the secondary data, I will use thematic analysis. I will segregate the data into five themes and in each of the themes; I will produce the analysis of economic impact of Brexit on the UK. Thematic analysis is the most common form of analysis in qualitative research. Thematic analysis examines, emphasises, pinpoints and records the pattern of data mainly based on the research questions or objectives (Knobe and Nichols 2013).
I have already taken the permission of the university to conduct the research. I will follow all the ethical norms of research and I will not entertain the data manipulation. I will only provide the data from the credible sources and all the data will be genuine.
In conducting the research, I may face the issue of data validation as in the literature review section; there will be various judgemental reviews and news. I may face the limitation of accessing the online pdf because of the financial boundary. I may also face the issue of time constraint in reviewing all the literature.
Conclusion
In this research proposal, aim, objectives and questions have been given in the first part justifying the rationale of the topic. It has been noticed that the economy of the UK has been degrading since the Brexit referendum because; the trade policies need a radical change. However, the political and economic conditions of the UK are not stable. The UK’s trade in gods showed the deficit in record high and key industries give the signal if weak economic growth. From the secondary data collection, the research will be done and the key themes will be divided based on the objectives of the research. The anticipated findings of the research might prove the negative economic downturn of the UK due to the Brexit and government borrowing has been increasing.
References
Adler-Nissen, R., Galpin, C. and Rosamond, B., 2017. Performing Brexit: How a post-Brexit world is imagined outside the UK. British Journal of Politics and International Relations, 19(3), pp.573-591.
Alhajji, A.F., 2017. OGEL Special Issue on” Brexit”. Oil, Gas & Energy Law Journal (OGEL), 15(2), pp.45-56
BBC News. (2017). How has the economy fared since the Brexit vote?. Available at: https://www.bbc.com/news/business-36956418 [Accessed on 9 Dec. 2017].
Bryman, A., 2015. Social research methods. Oxford university press.
Clemence, A., Doise, W. and Lorenzi-Cioldi, F., 2014. The quantitative analysis of social representations. Routledge: Routledge.
Dhingra, S. and Sampson, T., 2016. What kind of relationship with the EU is best for the UK economy post-Brexit?. Lse European politics and policy (Europe) blog.
Eisenhardt, K.M., Graebner, M.E. and Sonenshein, S., 2016. Grand challenges and inductive methods: Rigor without rigour mortis. Academy of Management Journal, 59(4), pp.1113-1123.
Flick, U., 2015. Introducing research methodology: A beginner’s guide to doing a research project. London: Sage.
Hair, J.F., 2015. Essentials of business research methods. ME Sharpe.
Knobe, J. and Nichols, S. eds., 2013. Experimental philosophy (Vol. 2). Oxford University Press.
Lim, W.M., 2017. Exiting supranational unions and the corresponding impact on tourism: Some insights from a rejoinder to Brexit. Current Issues in Tourism, pp.1-5.
Mcmillan, J.H. and Schumacher, S., 2014. Research in education: evidence-based inquiry. Pearson higher ed.
Neuman, W.L. and Robson, K., 2014. Basics of social research. Vancouver: Pearson Canada.
Partington, R. (2017). How has Brexit vote affected UK economy? October verdict. [online] the Guardian. Available at: https://www.theguardian.com/business/2017/oct/24/how-has-the-brexit-vote-affected-the-uk-economy-october-verdict [Accessed 9 Dec. 2017].
Pisani-Ferry, J., Röttgen, N., Sapir, A., Tucker, P. and Wolff, G.B., 2016. Europe after Brexit: A proposal for a continental partnership (Vol. 25). Brussels: Bruegel.
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