Impacts of UK Leaving the European Union

ESSAY 1
The European Union (EU) is known to be one of the world’s most powerful alliances of
different countries. The event known as the Brexit is one of the most revolutionary and
significant events in terms of the global trade and economic changes. The event has already
led to a number of implications and would continue to do so, around the globe. As a result,
there has been an ongoing debate as to what will the likely impacts of the said event. The
following work is aimed at analysing the impacts of UK leaving the European Union. The
impacts would be analysed on the lines of the trade and economic performance of the UK,
whether the same would be enhanced or reduced with such exit. The essay will begin with the
meaning of the term Brexit, its background and would analyse the possible impacts that have
been occurring in economic scenario of the UK. The essay will conclude on the whether the
overall effects are negative or positive.
The term Brexit is used to define the (Britain plus exit), that is the referendum in June 2016,
in which the UK voted to exit the European Union. The critics of the event and the major
number of economists are of the view that being the part of the European Union, the trade
and the economy of the UK was under a range of positive impacts; the same would be
withdrawn by the said referendum. It is significant to note that the European Union is the
largest trade partner of the UK in terms of the trade. This is backed by the fact that
approximately half of the overall trade of the UK are with the EU. Being the part of the EU,
there was a significant reduction in the costs of trade between UK and EU. The reduced costs
were reflected in the reduced and cheaper prices for the goods and services for the consumer
of the UK. In addition, the same aided the businesspersons to indulge into more export trades.
The leaving of UK from the EU will lead to the reduction in the trade and specifically exports
from the UK to the EU. The reason for the same would be higher tariff rates and the presence
of the non-trade barriers to the trade.
It is essential to note that the overall trade would be impacted on two major lines. Firstly the
new tariffs and secondly the non-tariff barriers to trade are the said two factors. It must be
noted that if the trades go on the same lines as that of the EU and the existing WTO rules
with the different countries, this would lead to the average tariff being charged on the exports
from the to the EU and vice versa, would be somewhere between 2% and 3%. This would
lead to the lower trade and a direct reduction in the GDP of around 1 percent. In addition to
the above the non-tariff barriers such as manufacturing requirements, plant, and animal health
regulations and others, that are necessary to be met before the imports. The said barriers and
other incidental barriers may now increase.

ESSAY 2
The next major impact would be on the foreign direct investments of the nation. This can be
explained as follows. Foreign Direct Investments or the FDI is referred to as the investments
that occur from outside the country and are used to acquire either the local entities or the
starting up new subsidiaries of the existing companies, or the expansion of the existing
establishments within a country. It is significant to note that the UK was one of the major
recipients of the foreign direct investments from the varied range of the members of the EU
(Sampson, 2017). As the country UK is a part of the Single Market, the country was an
attractive platform for the exports. It is further to note that the country comprises of a strong
set of the legal rules and statutes, together with the highly educated workforces and the
flexible labour rates. This has made the country an attractive sport for the foreign direct
investments. In numerical terms, the country was in receipt of FDI in terms of stock value of
£ 1 trillion. The UK FDI flow has been pointed out to be approximate around 25 to 30
percent from the EU membership, which marks a significant impact evolution of UK FDI
(Campos and Coricelli, 2015). Approximate value of the FDI from the member EU countries
was half of the total, as per the data of the UK Trade and Investment (UKTI, 2015).
The said foreign investment would result in a number of monetary aids, economies of scale
and technology and the benefits on line of the business operations for the UK. The Brexit
would result in the significant reduction in the FDI in the UK as per the trends as stated
above. This is also because a number of international agreements as on the lines of the World
Trade Organisation (WTO) agreements would be split between the UK and the EU. Because
of which there would be a dampening effect on the FDI (Dhingra et. al, 2016). In addition to
the above, there exist a number of coordination costs and complicated supply chain
procedures. With the leaving of the UK, and the above mentioned reasons, the FDI receipts
would be deeply affected, which would be further reflected in the UK global business and
trades statistics. Such losses of the investments would adversely affect the productivity of the
UK and the static income losses.
Another major sector that would be deeply impacted by the Brexit is the supply chain. The
supply chain is one of the essential elements for the competitiveness. These not only ensure
the lower prices, but also thereby aid in customer satisfaction and the timely deliveries. It
must be noted that the UK trade is majorly connected to the global supply chains. Some of
the industries of UK that are highly dependent on the supply chain are the telecom, financial
services, wholesale and retail sectors, mining and chemical products and obviously the
transport sector. The Brexit would lead disturbances in the global supply chains, and majorly