Brexit and Its Implications on UK Business Environment

Running Head: ECONOMIC ASSIGNMENT
Economic Assignment
Name of the Student
Name of the University
Author note

1ECONOMIC ASSIGNMENT
The Brexit is the event where Britain has been voted to leave the European Union.
The referrendium was initiated in June , 2016. The EU memebership benefitted United
Kingom from several aspects. The UK regions voted to leave EU custom union are expised
various risk. The Brexit though is much of a political event it has long standing implication
for econonomic, political, legal and regulatory framework. Following Brexiy Uk has
accouned a decline in the measured growth rate. Losing tne support of EU, UK busineeses
face a much weake position in the international market. The Brexis event brings some major
chnages in economic, political, legal and cultural environment in which the businesses
operate (theguardian.com 2018). Domestic as well as UK international busineeses face
uncertainty from the Brexit referendum.
Interantioanl busineeses are adversely affected from a fluctuating currency,
complicated legal and regulatory framework, delay in delivering goods services due to kegal
and trade barriers. The supporter of Brexit argue that Brexit also has some positive
consequences. The septration of EU, offers UK a greater political and economic freedom. In
the short run though Brexit seems to have only adverse consequence, in the long run UK can
stregthen its postion in the world market (Glencross 2015). The essay critucally evaluates the
potential changes in UK interantional environment after Brexit.
Economic, political, legal and cultural environment are important determiants of
business operation and success (McAleese 2004). The economic envitronment influencing
businesss related to money, goods and services. There are both micro and macroeconomic
factoraffecting business. The external economic environment mostly depend on the
macroeconomic environment. Exchange rate, interst rate, inflation, demand and supply
scenario are some of the major indicators of economic enviornment (Aliber and
Kindleberger 2015). An impressive GDP growth over the last few years offers a provides

2ECONOMIC ASSIGNMENT
busineeses a favorable envirnment of doing business in the domestic and internatioanl
market. Economic shocks like that of global financial crisis in 2008 and event of Brexit
marks a change in performance of different economic indicators afecting business.
Business operating internationally has to bear the cost of production in terms of loca;
currecy in which the business operates. A relatively strong position of domestic currency thus
reduces the effective cost of busineess. If currency deprciates then companies have to a
higher price for inputs in terms of foreign currency (Sloman and Jones 2017). From the
immediayte next month of Brexit, the value of pound has reduved sugnifucantly. This has
become a matter of great concern for internatioanl business. The figure below shows the
sterling exchange rate after Brexit.
Figure 1: Movement of sterling exchange rate after Brexit
(Source: .independent.co.uk 2018)

3ECONOMIC ASSIGNMENT
As shown above the value of pound has reduced significantly after Brexit. The trading
partners of UK are anticipating that the withdrawal of EU support to UK can put the nation at
a disadvantageous position. The pessimistic view about potential impact of Brexit pushes
down the value of pound .The difficulties also arise from a disruption in the supply chain
restricting expansion of business. UK has already accounted a subdued business investment
in 2017. The Bank of England has forecasted that Business investment is expected to 25
percent lower by 2019 as compared to the pre – Brexit period (independent.co.uk 2018). The
threat to business operation actually possess a threat to the productivity growth of UK in
future.
Figure 2: Percentage change in Business investment
(Source: independent.co.uk 2018).
A more critical fact to be discussed is the potential benefits and losses of being a
member in EU. The two most significant benefits are single market operation and benefit