Impact of Brexit on UK International Businesses

FUNDAMENTALS OF ECONOMICS
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BREXIT 1
Essentially, the Brexit vote was a first step for the United Kingdom to leave the
European Union. The move to exit the European Union has created uncertainties, opportunities
and challenges for the UK international businesses such as additional business costs (tariffs and
customs) and administrative bureaucracies. The Brexit move is going to cost international UK
firms free access to single market and other benefits therein. In addition, the UK economic
performance has declined and the likelihood of UK based businesses to forge new market
arrangements and penetrate new markets will slow down the growth of business and job cuts due
to the transitioning from the Union. Undoubtedly, the business environment is influenced by
economic, legal, cultural, economic and market forces. All these factors play an important role to
ensure the proper functioning of the business environment.
After the exit, UK international business will no longer have free access to the largest
European single market which could mean temporary loss of revenue, jobs as the international
firms strive to forge new trade partnerships (Cadman & Tetlow 2017).In addition, lack of free
access to the European Union market means that the International firms of the United Kingdom
will have to fulfill new administrative and legal requirements of the countries where they aim to
set up foreign businesses. This could be time consuming and expensive as compared to its
previous operations under the Union. The fact that the European Union market was the highest
recipient of the UK’s Export volume due to the available and expansive market will reduce the
revenue income for a while(Chu 2017).For the UK international firms they will need to incur
additional costs in terms of fresh licensing, taxation with new business partnerships.
In addition, international UK firms are likely to lay off some of their workers due to low
business cycle following the announcement. The vote has raised business investor confidence
issues thereby diminishing the hopes of other countries merging or expanding their businesses

BREXIT 2
with UK based international firms. Due to the low demand and anti-competitiveness of UK firms
due to the exit announcement, international firms are likely to cut down on production due to the
high inflation rates, market uncertainty, and additional costs of operations due to tariffs and
customs and worker layoffs. International UK businesses will have to incur additional costs in
possible registration, licensing fees, taxation while trading with European Union member states
and Non –European member states. Under the EU, there was reduced costs of doing business due
to the economic incentives put in place by the European Union.
Source: Chu 2017
Further, the UK business environment will operate under new trade policies and
legislations after March 2019 due to the fact that they are no longer European Union Subjects
thus the need to chart their own policy and trade legislation. In addition, International UK
businesses will have to renegotiate their trade dealings with members of the European Union
(Malaket 2016).This renegotiation is premised on the fact that the United Kingdom is no longer a

BREXIT 3
member of the European Union as of March 2019.Under the European Union, United Kingdom
Multinationals and transnational corporations enjoy free access to the international single market.
However ,following its ouster,UK firms will have to renegotiate their dealings and incur tariffs,
customs and other administrative, bureaucratic laws that apply to non –member states of the
European Union.
Following the Brexit vote, has been drastic changes in the performance of the UK
business and the economy. Owing to the opting out of the Union, UK business sourcing raw
materials from the European union countries or other countries will incur additional costs due to
that fact that
tariffs and customs will be applied(Market inspector 2017).Also, this additional costs will make
the UK export products less competitive for the international market .In a bid to boost their
profit margins, international UK businesses are likely to lower the prices for goods and services
to stay aloft which isn’t good for business. Low pricing will lead to reduced revenue which is not
good for Businesses. Due to the vote, there is uncertainty as to the future of trading relationships
of the UK. Getting out of the Eu has led to loss of confidence in the economic stability of the UK
thus leading to migration of skilled labor, withdrawal of foreign direct investment and
uncertainty of forging new trading relationship out of the European Union (Giles 2016).
In addition, the UK leaving the EU has cost it revenue, loss of market and confidence
with potential foreign direct investment which might lead to reduced government and
international business revenue, job cuts due to the transition period of forging new trade
relations. European Union member states firms are likely to ditch UK suppliers (Inman 2017).In
the event that UK international firms are unable to access EU markets, there is going to be
massive revenue loss for the firms. In addition, international UK firms might have to lay off