Impacts of Hard Brexit on Businesses

Running head: IMPACTS OF HARD BREXIT ON BUSINESSES
Impacts of Hard Brexit on Businesses
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1IMPACTS OF HARD BREXIT ON BUSINESSES
Introduction
The global economy and commercial scenario, over the years, have experienced
considerable changes and dynamics, primarily owing to international phenomena like that of
liberalizations of commercial aspects of different countries, Globalisation, progress in
technological and infrastructural frameworks and also to the changes in the operational
frameworks of the governments of different countries across the globe (Popescu 2013). All
these factors have together contributed in making the global business and economic
environment more interconnected, inclusive and integrated.
The increase in the integration and inclusiveness in the global business and economic
environment, the economic, political, social as well as commercial frameworks of different
countries across the globe are highly influenced by the different phenomena occurring across
the globe of in different parts of the world, at different points of time. In the recent period,
example of one such phenomenon is that of “Brexit”, which being an abbreviation of the
notion of “Britain Exit” refers to the probable and pending exit of the United Kingdom from
the membership of the European Union. Announced through a referendum in 2016, Brexit is
expected to come into implementation on March, 2019 (Goodwin and Heath 2016).
Taking this into account, the essay tries to discuss and interpret the effects and
implications (both probable ones as well as the ones which have already started occurring in
the speculation of the same), which the materialization of the Brexit, if implemented, can
bring in the coming years, particularly in the economic, political and cultural aspects of both
the international business scenarios of the European Union and the United Kingdom.
European Union and United Kingdom
To understand the implications of Brexit, it is crucial to know about the European
Union, which, in the contemporary period, is a conglomeration of 28 countries of Europe (of

2IMPACTS OF HARD BREXIT ON BUSINESSES
which one of the significant member countries is the UK) and is one of the most significant
and dominating political and economic partnerships and free trade agreements in the recent
times. The EU also has a common currency zone, consisting of 19 of the 28 members where
Euro is used as the common currency for all economic and commercial transactions (Nugent
2017). The primary objectives behind the formation of the EU were that of facilitation of
trade and commerce among the member countries by building a business zone with little or
no trade barriers, uniform regulations and proper infrastructures so as to develop the
economic and commercial aspects as well as to facilitate political and cultural amalgamation
among the member countries.
One of the most significant and economically developed member nations of the EU as
well as one of the biggest contributors to the EU budget, since the initiation of the European
Union is that of the United Kingdom, as can be seen from the following figure:
Figure 1: Share of contributions of different member countries in the EU budget
(Source: Geostata.com 2018)
From the above figure, it can be seen that the UK contributes nearly 10% share of the
total budget of EU, thereby making it the fourth largest contributor, just after Germany,

3IMPACTS OF HARD BREXIT ON BUSINESSES
France and Italy. The country also contributes significantly in the trade and commercial
scenario of the European Union. In general, nearly 6.6% of the total exports of the EU goes to
the UK and nearly 51.4% of the total export volumes of the UK is absorbed by the other
member countries of the European Union (Hobolt 2016). However, in spite of such a robust
bilateral relation between the UK and the EU, the decision of Brexit was taken and is soon
about to be implemented.
Brexit: Meaning and Reasons behind it
The term “Brexit”, as discussed above, refers to the decision of UK to exit from the
European Union, taken through a referendum (in 2016), which with signature from thirty
million people, acquired 52% votes in favour of the exit against 48% in opposition to the
decision. The decision is expected to come into operation from March 29, 2019, with UK
officially exiting from the European Union (Dorling 2016). This, if implemented, will give
the UK sovereignty and the rights to take its own social, economic, political and commercial
decisions and laying its own rule and regulations. The primary reasons behind such a decision
on part of the UK government are as follows:
Trade with Non-EU countries- In the increasingly integrating global commercial framework,
with more flexibilities and freedoms in doing trade, the possibilities for the UK to expand
their trade relations with other parts of the world and earning positive trade balance,
especially with the Non-EU countries have been expanding as can be seen from the following
figure: