Leaving decision of UK to EU

BREXIT (Good and bad
things about it when it
comes to business)

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
BREXIT is a word form for “Brexit exit”, that refers to the decision of United Kingdom
to leave the European Union that has been taken on 23rd June 2016. The decision affects the both
the region negatively and positively. The present study is going to discuss the advantages and
disadvantages of Brexit in terms of business.
MAIN BODY
Leaving decision of UK to EU will undoubtedly be disruptive force for the businesses
and especially for the small businesses. UK has been considered as one of the best countries to
start an organisation that could change because of unknown effects Brexit could bring. Following
are some advantages and disadvantages of Brexit in terms of business. The impact of Brexit on
UK businesses will depend on the whole scenario emerges from the negotiation between UK and
EU.
Advantages
According to an analysis contribution of UK to European Union Budget is £13.5 billion
and the net contribution of UK is amounted to around £8.6 billion every year. The decision of
Brexit is beneficial for the UK government as the decision make them free from contributing.
Along with it, (Koch, 2016) mentioned that this brings an opportunity for UK to explore free
trade with other countries like China that provide them more opportunity to expand the business.
Devaluation of pound on 24th June 2016 had fallen to the lowest level since below $1.35 that
brings a number of advantages for the business owners of tour and travel agencies. Weakened
pound could bring advantages for the hospitality sector by enhancing tourism. According to
(Gartzou-Katsouyanni and et. al., 2018) superlative weakening means world will get more
pounds for their currency that in turn will make the UK cheaper destination for people that is
new consumers to visit. Along with it, it is also beneficial for the exporter, for example; Barley,
second largest arable export in UK attract tariffs of around 50% of the current market price. The
foreign holidays are expected to be more expensive and passport control processes are expected
to become more complex.
(Driffield and Karoglou, 2019) have argued that back on Brexit, the UK may introduce a
point-based entry system that result in higher quality candidates coming to the UK. It has been
stated by the CEO of retail business sector like John Lewis and Sainsbury that after the Brexit
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decision the sale raise to next level. Decision to leave EU will provide an opportunity to UK of
not bound in the EU regulations. From the business context, UK will be free to trade and
negotiate with other countries globally on their own terms. The other advantage of the vote
include, competitive edge and global supply chain connections that make the UK an attractive
destination for foreign investors (Miller, 2017). This will provide the opportunity to businesses
to grow and develop in the country as the leaving decision enable the government free to reduce
VAT charges that encourage investment. After Brexit UK is likely to have more control over
negotiation on trade agreements and deals.
Disadvantages
The 66% of the companies from UK says that Business organizations gets impacted due
to Brexit. The imports and exports of goods and services to and from the European nations will
be no longer a part of the free trade area. The business gets affected due to the UK leaving the
EU and it affects the employment level of EU people in the UK and UK people in the EU. Every
business organisation of UK gets affected by the effects of Brexit also when it just operates and
have customers in UK only. This can be explained as for example, a car maintenance company
serving only in UK, but the replacement parts that company requires may be manufactured from
outside the UK, thus it needs to source new suppliers so that it can avoid possible delays. The
company may also have to incur extra costs for potential custom duties and fess and this will
lead to add in the existing procedure.
After UK voted for leaving the EU, number of migrants who were looking for jobs
outside the UK has spiked up. And this can be said as per the statistics that unemployment rate
within UK is likely to increase upto 6.5% because of the recession, which is a loss equivalent to
500000 jobs. Therefore, it can be concluded that ability of recruitment and selection of
international talent for UK businesses is at stake due to the Brexit impacts.
Retail companies like Tesco, Unilever, Marks & Spencer and Sainsbury are feeling a bit
of sling due to the Brexit impacts. In October 2016, Tesco and Unilever got into price war of
sorts. In the Unilever threaten for increasing the prices of products due to the decline in pound
value. The Brexit has further affected and impacted the Tesco company to drop the plans and
strategy for opening new locations. The impacts of Brexit on Tesco can be also described as: the
company has also initiated job cuts and store closings and the company is also replacing the
management within its Express chain having lower paid shift leaders.
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The large grocery retailers like Morrisons, Sainsbury and Tesco continuously compete for
gaining the competitive advantage and market share. But these companies struggles due to the
additional and extra cost incurred on the product imports. In addition to this, the SMEs of UK
also gets affected due to the effects and impacts of Brexit. The SMEs suffer while seeking the
business financing. The effects of Brexit make lenders nervous and leads to make difficulties for
the business funding due to market changes. The uncertainty of the future trade relations of the
business relations between the UK and EU gets affected due to the Brexit effects.
CONCLUSION
From the above conducted report, it can be analysed that Brexit has lead to affect the
business organizations in many ways. The business has gain many benefits and advantages due
to the Brexit. But, there are some negative impacts of the Brexit as well on the business
organizations.
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REFERENCES
Books and Journals
Miller, D., 2017. Business Express: Developing Business and Customer Awareness: What drives
a successful business?. Pearson UK.
Koch, T., 2016. Before a potential Brexit: European immigration to the United Kingdom, its
relative benefits and politico-economic implications (Doctoral dissertation, PhD thesis,
Johannes Gutenberg University, Mainz).
Gartzou-Katsouyanni, K. and et. al., 2018. Understanding Brexit: impacts at a local level:
Mansfield case study.
Driffield, N. and Karoglou, M., 2019. Brexit and foreign investment in the UK. Journal of the
Royal Statistical Society: Series A (Statistics in Society). 182(2). pp.559-582.
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