Economic Impact of BREXIT On The UK

Economics 1
Economic Impact of BREXIT on the UK
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Economics 2
Introduction
The promulgation of BREXIT initiated a momentary change in terms of economic
growth and development within the globe and UK as a whole. Since the BREXIT, there have
been arguments for and against the economic stability of the United Kingdom in terms of its
impacts on labor, financial impacts, capital, and immigration issues (Sampson et al, 2016). This
is because of the larger contemplation over the instability and uncertainty that economists and
policy makers have been forecasting about for both the UK and European Union member states.
The long haul effects are believed to be subjected to the legislative activities in the
coming years since the policies will be deemed to directly or indirectly affect the separation in
terms of its economic implications (Chang, 2018). This contention has been made on the
perception that even though BREXIT will significantly hurt the monetary developments in the
UK, the country’s new alliance with the EU and the world as a whole will provide it with
economic stabilities. Along these lines, this paper will present the economic theories and models
of trade and migration that are pertinent to evaluate the economic impact of BREXIT on the UK.
Economic Impact of BREXIT on the UK
In modern day happenings, there is a significant reflection that the BREXIT referendum
was politically championed. As a result, it has enabled a change in the economic cycle of not
only the Britain, but even the European Union and the world as a whole by extension. The UK is
stationed to battle under the economic turmoil, and its national debt is predicted to rise due to
national increased pressure on its economic factors including labor migration and capital (Van

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Reenen, 2016). This can be explained using the figure below
Figure 1.0: Percentage of the GDP growth as compared to staying in the EU by the UK
Source: Treasury H M Government, 2018
From the figure above, there is evident of uncertainty and negative perception in the economic
models within the nation. However, amidst its decision to join the EFTA, choosing to trade with
the FTA countries over EU will not do it much in terms of export since the close tie nations are
within the EU (Treasury H M Government, 2018). It therefore leads to a complicated sense of
economic uncertainty for the UK with the following economic variables being affected;
Foreign Direct Investments
The European Union bloc has remained to be one of the best trading partners of the Great
Britain, and of the off chance that association between the twenty eight countries in the EU and
the UK is relinquished, the United Kingdom will have an incredible freedom to exchange with
the bloc over other countries around the globe. However, given the strength of the EU in terms of

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trading block and the application of the World Trade Organization (WTO) principles, countries
in the EU will have a significant headwind over the UK. It therefore prompts the economic
impact in terms of national interest over the association with other countries with respect to its
trade and partnerships (Treasury H M Government, 2016).
Without denial, BREXIT is a gargantuan politico-economic upset to the European
economic frameworks. This is because BREXIT can create turmoil in the EU economic
framework since the prime offer who employs relatively cheap bargaining power will affect the
Multinational companies within the EU. As a result, the UK will face a retribution effect in the
absence of FDI benefits from Europe since there will only be a single market for the UK.
However, if both the UK and EU decides to introduce a comparable tariff with a depreciated
Sterling Pound against the Euro, there will be an increased market share for the UK market
unlike the EU market. It will therefore lead to an increased pressure on UK to promote
uncooperative tax and monetary policies that leads to an exordium tariff effects (Minford, 2016).
Trade impacts
Majority of the UK trade before the BREXIT were based on the market accessibility to
its EU membership. With the inclusion of the EU regulations, the UK had a comparative
advantage over non EU member states; however, the BREXIT has led to a balanced trading
ground. As a result, the country is currently seeking the re-entry in to the EU market with revised
Term of Trading (Belke and Gros, 2017). Incidentally, the country will therefore face challenges
in terms of capital movement since the larger number of its population is service based (Sampson
et al., 2016). As a result, the absent of the EU bloc will result negatively on the business
formation and growth with UK due to low capital formation. It will therefore lead to the trade
based economic future of the country depending on the country’s evolution of economic and