Effects of Brexit on UK Economy and Standard of Living

Block 5: Principles and
Applications of
Macroeconomics

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................4
Macroeconomic policy analysis...................................................................................................4
Variables used in analysis of Brexit on UK economy and standard of living.............................5
Background of the UK economy before Brexit...........................................................................6
Review of major opinions and predictions around BREXIT.......................................................7
CONCLUSION AND RECOMMENDATIONS............................................................................8
REFERENCES..............................................................................................................................11

INTRODUCTION
The European Union (EU) is basically refers to the political and economic union which
comprises the 28 member states which are mainly located in Europe and was established in 1950
with just 5 members. The main purpose of the union is in regard to promoting the peace along
with establishing the unified economic and monetary system. It also works on promoting
inclusion and combating discrimination and removing unnecessary barriers to trade and borders
and enhancing the technology and scientific aspects (Heppell, Crines and Jeffery, 2017). The
European council provides direction to the overall political decision and but is having no power
to pass laws. There are mainly three institution which is being involved in the EU legislation,
first is the European Parliament which majorly represents the citizens of EU and is also directly
elected by the citizens. Next is the Council of the European Union, which is the representation of
the government of each of the member countries. Thus, the presidency of the council is shared by
the member states on a rotational basis. The last is the European Commission (EC) involving
legislation for the betterment and interests of the union as a whole.
The Britain joined the European Communities in the year 1973 which later becomes EU.
The creation of the first parliament was done in the year 1979 and as an outcome of the
Maastricht Treaty, the EC becomes the EU in 1993 and then the referendum was formed by Sir
James Goldsmith in the year 1994 for contesting the 1997 election by providing referendum on
the UK's membership in respect to EU (Koutrakos, 2017). In addition to this, the Treaty of the
Lisbon, 2009 resulted into increase in the authority and power of the EU parliament and in
addition to this provided legal authority as well in respect to signing and the negotiating the
international treaties.
The events which lead to making Britain leaving EU started when the British PM
Cameron made a referendum promise on Britain's membership in EU if the conservative party
gets elected in the general election. This was done with the intention to gain the support of the
euro-skeptics within his own party. In 2015, voters elected conservative party and Cameron also
confirmed in the speech that there will be in/out referendum in EU membership and has also
negotiated a deal with the EU leaders which will result into giving Britain a special status. Later
Cameron got struck by a blow and then Boris Johnson joins the leave campaign. Britain voted
52% to leave EU and after which Theresa May becomes the PM and then the formal procedure
for leaving EU proceeded and for which it was required to invoke the Article 50 of the Treaty on

EU. In 2019, Boris took as the PM won a majority of vote in UK general election and confirmed
that Brexit will be done by 31 January 2020 (Brexit timeline: events leading to the UK’s exit
from the European Union. 2021). The European Union (Withdrawal Agreement) Act received
consent which will implement the withdrawal agreement being negotiated by the UK and EU and
from 31 January 2020, 11 p.m onwards, transition period started and at the same time on 31
December 2020, the period ended and UK left the EU single market and custom union. The trade
negotiations among the UK and EU covered both tariff and non-tariff barriers to trade which
ended with an agreement which complied with the principles of UK and the president of EC.
Therefore, in simple terms, Brexit can be defined as the exit of Britain from the EU and the
European Atomic Energy Community (McGowan and et.al., 2017). There were lot of debate
pertaining to the pros and cons of it and its implication over the country. The impact can be seen
now after the exit and looking at the trade deal. But it is important to note that the broad part of
the economy was of the view that it will highly impact the UK economy and might pose greater
challenges in regard to the education. After Successful exit, the EU laws will not have any
authority over the British laws but EU Act 2018 will retain some laws under the domestic laws
that would be amended by UK.
On account of the positive side of the Brexit, it will result into accomplishing greater
freedom in regard to the creation of the trade related regulations and deals. It will give access to
the single market and the custom union (Schimmelfennig, 2018). In addition to this, Britain will
be having greater control over the uncontrolled immigration in the UK. The negative outcome
would be that it will put UK into a dangerous position in regard to having to accept the EU
economic and political policy.
This essay provides an evaluation of the effects of Brexit pertaining to the living standard
in UK along with the survey of the various predictions and opinions of different voices during
the different stages of Brexit process.
MAIN BODY
Macroeconomic policy analysis
The macro economic policy is the study of the behaviour of the economy as a whole
which takes into consideration all the economic factors. The macro-economist tries to estimate
the economic condition in respect to the consumers, firms and the government for the purpose of