Economic Consequences of Brexit

This assignment provides a comprehensive analysis of the economic consequences of Brexit, covering topics such as trade disruption, impact on digital industries, energy sector, migration, and more. It includes a list of references to relevant studies and publications, making it a valuable resource for students researching the topic.

Impact Of Brexit On Trading
Relationship Between UK And
EU

Table of Contents
Introduction......................................................................................................................................1
Main body .......................................................................................................................................1
“The impending Exit of the UK from the EU (Brexit), will necessarily force a new trading
relationship on the UK and the EU.”..........................................................................................1
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

Introduction
In this period of increased globalisation, the international economy is as relevant as the
domestic economy. Most of the states in UK voted for change and leaving of the European union
through invocation of Article 50 ( Langan, 2016). This has made a drastic impact on global
economy and has resulted in serious global trade problems within the country and around its
international borders. The European countries are governed by the treaties of EU and has various
sectoral programmes and agreements in the areas including environment, energy, transport etc.
These areas are the concern that would lead to economic change and would also entitle to
amendments in certain laws related to business. This report establishes conclusion on the impact
of Brexit on the global trade, new trading relationship on UK and EU and the laws that would be
affected because of amendments to article 50.
Main body
“The impending Exit of the UK from the EU (Brexit), will necessarily force a new trading
relationship on the UK and the EU.”
European union also know as EU is a combination of an economic and political
partnership among 28 European countries. This union was established after world war two so
that they can foster economic co-operation. This has grown to work as a single market which
allows people and goods to move around freely (Barrett and et. al., 2015). They have their own
currency which is recognised as EURO this currency is used by 19 members. They have their
own parliament and they sets their own rules and regulations such as consumer rights, company
laws, environment laws, tax laws, etc.
As UK is exiting EU they will no longer be required to apply the rules and legislations
defined by EU. They have implemented certain EU laws such as English law that will continue
to be the part of UK unless they are amended or repeated. Other EU laws that has been directly
applied on UK will fall away as and when UK withdraws from the EU market. Lots of statutory
laws which were made with pursuant to the European communities Act 1972 if not repealed by
UK will cease to apply on them. Hence they have to implement the exercise that will determine
which of the laws that they have to retain, amend or repel.
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Trading business in the international markets needs to Import and export goods and
services according to the laws that prevails in that country (Belke and Gros, 2017). As
countdown to Brexit is appearing near, various terms that may affect the operations of business
in global sense has to be taken care. Brexit focuses on mainly 12 priorities that will help them to
expand their economy and would also help them to increase their global term of trade. These
priorities are:
 Providing certainty and clarity about the rules and regulations that will govern trade.
 Taking control over the laws that would be created by UK
 Strengthening the UK Union so that there would be consensus among them.
 Protecting the strong historic ties with Ireland and maintaining the Common Travel Area
so as to promote tours and travel.
 Controlling immigration process to secure the boundaries of Union
 Securing rights for EU nationals in the UK and UK nationals.
 Protecting rights of workers in EU states so that they are able to work without any harm.
 Ensuring free trade practices as this is the main motive which will help them to ensure a
good business opportunity with European markets.
 Securing new trade agreements with other countries which will promote imports in the
Union and would also help in exporting at same tariffs as decided.
The implications of Brexit are far reaching and would encourage trade in UK. These has
been identified as:
 Wider market place and commercial issues: The business units are experiencing changes
in the labour market and the effect of the currency volatility. Factors such as cost and
availability of supplies may change substantially (Bergin and et. al., 2016). Which will
provide opportunity for increase in trade between EU and UK.
 Period of regulatory and legal uncertainty: As new regulations are likely to replace the
Eu law and UK have to bring into effect the future trade arrangements. The business
practices will take time to adapt to the changes that may happen.
 Supply chain issues: As this is the main issue that would be faced by business
organisation. They may get affected by the tariffs and the country of origin requirements.
The rule that is related to identification of country of origin may change.
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 Change as to source of funding: As after Brexit would be implemented funding practices
from the EU will likely to cease. So the companies which are incorporated in UK has to
change the way of source of fund raising.
 Issues around brand names and designs: The intellectual property right holders will need
to apply for a separate UK trade mark right or the intellectual property rights as and when
UK exits the EU.
The importers from EU and customers from UK has to check various changes related to
the tariffs, restrictions and the regulations. The future of trading in the EU countries can include
trading under World Trade Organisation rules and could include free trade agreements.
In the present context, EU countries including UK are trading as they are trading in the
single market. This included that while trading in the market they were free and there was
absence of duties and quotas for the EU members (Brakman, Garretsen and Kohl, 2018). The
principle of free movement of people also helped the traders to access of workers and services.
After the countries that would exit from the EU union will have the restricted rights as to trade
and business within the continent.
As in present the UK based companies can sell the goods to EU customers without
levying of any extra tax and they can also import goods tariff free. But due to Brexit terms and
conditions a new arrangements has to be made that includes
 A new negotiated free trade deal or
 The terms of WTO
Either of the arrangement will affect the business practices and would increase the cost of
the products that are offered to the consumers.
Trade agreements has been the central theme of the discussion that is being done. This
has lead to changes in certain terms and laws such as:
 Contracts that were made before Brexit and the terms that regulate them.
 Commercial laws or Trading laws which would be deregulated and the international
standards that would be formulated.
 Competition governing such as merger controls and vertical arrangements
 Companies and the securities law that would be majorly affected.
 Taxation policy and the various regulations etc.
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Trade is one of the essential part for growth and property of economy. As UK will leave
EU it is ensured by the government that businesses and consumers can continue to trade freely
with one another. The Brexit will provide an opportunity to UK business through potentially
ambitious new trade policy (Crowley, Exton and Han, 2018). As UK will have a new economic
partnership with EU it will allow them negotiate new international trade agreements covering
goods, services, investments, data, government procurements and intellectual property.
Certain changes as to consumer law has been drafted in the European Union(withdrawal)
act 2018, these changes in the union includes:
 Amending the part 8 of the enterprise act 2002, which will allow enforcement bodies to
apply enforcement orders in the cases of breaches of the consumer legislation which will
harm the collective interest of the consumers. Also the rights of the enforcers from the
EU members states to continue proceedings in UK will be removed.
 The Part 4 to the draft of that revokes the Consumer protection cooperation regulations
completely. These agreements will cease to apply to UK after Brexit.
 The consumer rights act 2015 provides the essential contractual rights and remedies to
consumers when they transact. Currently CRA makes the distinction among contract
involving imports from non EU countries. Due to this draft there would be certain
changes made which includes
 Contracts terms that reflects international conventions to which EU is a contractor
will no longer be protected from the application of unfair terms rules.
 The statements that are made by importer into UK will be considered to be relevant
and implied. The statements that are made by EEA will no longer be considered as
relevant. This would impact the trading practices and would lead to create confusion
for a certain time.
Certain laws that are related to commercial or trading laws are being affected through this
process, as there has been Deregulation which includes that Brexit without EEA membership
will create a potential for UK to use a more deregulatory agenda in wider areas that would be
considered as burdensome for business entity (Lawless and Morgenroth, 2016). They would have
to follow amended consumer protection act, safety and standards act, product liability and
environment laws. This would help businesses that are focused on UK domestic market or those
who are exporting to non- regulated European countries. This would also impact on the
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competition control measures such as merger control, certain transactions will no longer benefit
from merge control review that are under European merger regulations, so they would face
additional scrutiny while in UK competition and market authority. This would also lead a
difficult enforcement action by CMA. This would enable UK to potentially choose to diverge
from EU competition law.
Financial services is one the significant part of UK's economy. As this contributes to the
UK tax receipts and its contribution to balancing the UK's overall trade deficit with rest of world.
As most of the service that are provided are under the pass porting rights these would get largely
effected (Cumming, and Zahra, 2016)). A significant proportion of UK financial services
regulation is derived from EU legislations which are with direct effect which could fall away
automatically. While UK will gain the ability to repeal or modify others. This will cover
AIFMD, MiFID, CRD IV, the AML regime etc. If UK ceases to be the member of EEA then
such pass porting rights would get cease to be available to the firms.
Brexit will also effect the life of companies in a greater aspect as this will relate to their
access to UK or to the continental markets, as well as to the financing of their companies. Apart
from this the legal status of companies would also get effected. This has been recognised that
access by the Eu companies to the UK market will remain flexible. It is the major problem that
whether the foreign companies after Brexit would be recognised or not. As this would be the
major consideration which will effect operations of the companies. As it is stated in Article 54
companies that are formed according to the law of member of state shall be treated in the same
way as natural persons are treated. There would be no restriction to the jurisdictions where the
registered office is situated and the principal place of business is located. The member
companies would have full freedom of establishment. This will make companies to regulate and
increase their operations easily in EU so that it will generate a trading platform.
After implementation of Brexit UK will leave the customs Union. Now UK is arranging a
new customs area that will provide a frictional trade possibilities in goods between EU and UK
and this will also help them to allow a new trade relationships with the partners around the
world. This procedure will also follow to protect Integrity of the single market and customs
Union. They have agreed to provide a new facilitated custom arrangement with combination of
customs territory which will make it easier to improve the relationship between other countries
and smoothen the trade practices. UK will apply the EU tariff's and trade practices that will make
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it easier for the exporting and importing traders so as to increase the trade. They have made a
consideration that will help them to remove the needs for customs process between UK and EU
which include custom declaration, and entry exit summary declaration. They would be provided
with wider trade area, they would reduce frictional trade for majority of UK goods that will
encourage the sellers to increase the sell and exports of their goods (Dhingra, and et. al., 2017).
As they would share facilitated customs arrangement they will pay UK tariff if it is destined for
UK boarders and would pay EU tariff if they are destined for EU boarders, this would help the
exporter to easily export goods to the required destination.
The financial market will see the ups and downs during the Brexit process which will
lead the traders to keep their market sentiments at a restricted approach. The prospective
derivative of EU which has been taken to UK law governs the content, format, approval and
publication of the prospectuses. After Brexit UK may longer be bound by the prospectus
derivatives, this would make them realise that if they have to issue shares to public then they
have to state and prepare a prospectus subject to certain exemptions. UK has taken steps that
helps to expand these exemptions through which they can make more offers in UK market
without prospectus being issued. As this would lead to increase in market trade among them.
For the businesses that have Intellectual property in EU will cease to apply in UK. These
rights includes community trade marks etc. only the rights that has been granted by UK would
prevail and the businesses firms would require to re apply for the protection of their intellectual
property rights. This would help the firms to create a new intellectual rights and would also
enable them to promote innovation.
Brexit will also help in the real estate sector as it would become a safe heaven their
would be a market instability the real estate market could benefit from the overseas investments.
It would also encourage people to live their as their would be decrease in the rent and letting
activity which would influence companies enter to into the nations (Dhingra, Ottaviano, and
Sampson, 2015). This would also help large financial organisation to relocate themselves and
would also encourage employment.
Brexit effects the organization in various ways. Changes introduced in the marketplace
due to implication of Brexit. The cost of goods and availability of goods changed in this
situation. After replacing the EU law it faces the instability in legal structure regarding trading
system in U.K. Some of the ways as follows in which Brexit affect the businesses:
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 Supply system issues: supply chain issues arises due to requirement of country of origin.
The main reason is that identification is changed due to rules may change.
 Issues at international level: some businesses dependent on the transit from cross border
countries. So after implication of Brexit it may face various hurdles.
 Additional expenditure on trade and tariff : importers and exporters may have to pay
additional charges on trades.
 Effects on employment and staffs: staffs and employment may be changed due to
requirement of additional work. Because many workers in U.K. From the EU and citizens
working in U.K. are from EU.
 Issues for right holders: conflicts around the brand name and designs will arises.
Because right holders need to create separate trade mark and designs for U.K. Products.
The Brexit affects the international trades as well as businesses in U.K. Affects in the
way of tax polices as follows:
 Agreement:United Kingdom will get back the state of being free to come to a decision
about its own tax agreement in the are as thing talked of to European Union law,such as
those high-lighted under.
 VAT:VAT is a European tax but instrumented by kept by man law. United Kingdom will
be free to come to a decision about whether to repeal, make good or make payment
before work currently in existence VAT (making) laws. If repealed, likely to be gave
another in place of by another form of sales tax as VAT represented 22% of every year
tax income in 2014/15. The standard rate of it in U.K. is 20% but in the EU it is 15%.
 Taxes office for goods taken in from another country tax: things generally done tax
(currently made over-great use of directly by the European Union taxes office for goods
taken in from another country taxes control) will fall away, having need of United
Kingdom to put forward, into use its own taxes office for goods taken in from another
country duties and move into a taxes office for goods taken in from another country
agreement with EU (Dhingra, Ottaviano, Sampson, and Reenen, 2016). Custom duty in
EU is calculated on the basis of product code as specified by the union. Apart from that,
U.K. Specified the rates for non EU countries separate and for others at standard rate.
 walls to keep others out to trade and so on: There are a number of European Union
straight to tax guides instrumented into kept by man law which take away tax barriers to
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trade, e.g. dividend keeping back tax between group companies under the father or
mother less important pointed order, which will be thing talked of to paper.
However ,United Kingdom companies may not keep keeping back tax cares where not
covered by 2 times tax agreements between nations.
 Other possible unused quality changes: United Kingdom will have state of being free
to make simpler are as of the United Kingdom tax code e.g. controlled out of country
company rules give tax breaks for special industries without having to give what is
desired, needed to the requirements of the European Union state help rules and-price
money tax on question under discussion of shares and SDRT on gives property in law of
shares into space between parts services which currently stopped by chief town taxes
pointed order.
 It face various finance and restructuring related issues at the time of Brexit as follows:
Insolvency control: increased danger of making an attempt to be placed over others
Insolvency proceedings in EU as an outcome of loss of rule having need of European
Union being seen of United Kingdom Insolvency business done at meeting (Ebell, and
Warren, 2016). Increased uncertainty for English Insolvency experts looking for the help
of courts in EU. common (to 2 or more) being seen: Loss of automatic European Union
being seen of United Kingdom Judgements. This could make the English law design of
trade way a less pleasing structuring again thing for which selection is made for over-seas
companies in EU.
 Get money for side pointed order:United Kingdom rules giving effect to the get money
for side pointed order will keep being well-based but the wide approval of one's work of
English law get money for side arrangements elsewhere in the European Union will be
uncertain.
 Money used in a country danger: danger of very strong (great) money used in a country
fluctuations, making it more hard for parties to have meeting with unhedged payment
obligations denominated in other money used in countries (and in a very much event-
ready space, coming out in money controls).
Effects of it on employment law as follows :
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 What will be kept: Many Employment rights which form from another from European
Union (making) laws have been put law into effect in kept by man (making) laws so will
likely keep being, such as decision-making and family-friendly Employment rights.
 Works gives suggests and so on: range of observation for change for the good in some
areas taken into account not in right order, form, time troubling on business,such as
works opinions and all together giving expert opinion obligations (thing talked of to
agreement with Trade unions which may be politically hard).
 Working time and so on: chance to change for the good systems sensed to existence
with out certainty and make come into existence unnecessary weights down and costs for
business, such as working time, time of rest from work undergo punishment and equal
process for office workers.
 Coming into another country: is dependent on the United Kingdom's post-Brexit
relation with the European Union but full Brexit would have to do with state of being free
of motion restrictions European Union persons may be thing talked of to the same visa
restrictions as non-EU persons.
 Worker give part offers: possible unused quality force of meeting blow on worker part
offers if current Exemption sunder detailed account of offers being made Rules stop to
send in name for (thing talked of to grandfathering).
The above discussed issues arises at the time of Brexit. But apart from that these affect
the U.K. market in positive way (Fahy and et. al., 2017). The country will be able to increase
trade at international level. It also helps in increasing the businesses in U.K. as with international
level trading activities. And various disputes arise which are as follows:
 ruling law: The United Kingdom courts may either let go of the Rome I and Ii rules on
opposite position of laws in place, or go back to the Pre Rome I and Ii system of
things over time. A good quality of English ruling law will be respected by courts in
EU as they will go on to send in name for Rome I and Ii.
 Jurisdiction: It is uncertain how EU courts will way in contracts giving Jurisdiction
on English Courts, where a counterparty is EU one living in a place.
 Parallel proceedings and so on: No bar on parallel business done at meeting, but
English courts get back power to come to be anti-suit Injunctions in relation to EU
business done at meeting.
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 Service and Enforcement:Service of English proceedings and Enforcement of
Judgements in EU are both likely to be less straight-forward. Judgements of CJEU
will no longer be cord used to put together in United Kingdom.
The country increase the trade but faces many disputes raised in every sector. As well as
it also effect the small business. The Brexit effects these business with the introduction of article
50. as the citizens of EU working in small businesses for U.K. But it has not guaranteed them to
do work as they do in current situation. The changing environment in U.K. Limit the skilled
work force. These type of businesses are very helpful for every economy. But apart from that
Brexit affects these very badly or can say that it effect these in negative way. But article 50 is all
about to prepare it (Hatzigeorgiou, and Lodefalk, 2016). These effects can be analysed through
the data of GDP. Small business called the lifeblood of the U.K economy. After falling in the
GDP rate the growth of these businesses get stop at immediate point and effect the economy
also. Pound also goes down weak and as a result the inflation pushing up. This will effect the
small businesses widely. Many of the larger businesses use the forward contract as a instrument
to fix the currency rates. But overall results are very excellent more than the expectations. These
businesses welcome the new policies introduced by the nation and take a higher comfort from
that. So the Brexit is not considered so much bad wolf.
Conclusion
This has been concluded from the report that exit of UK from the EU has been considered
as an opportunity for trade and increasing business practices in the country. This would give rise
to the new relationship among UK and EU (Kierzenkowski, and et. al.,2016). Some of the legal
facts such as changes that would be made in the company laws and the way of raising funds from
the company EU has been changed in UK. Companies has to take care about the intellectual
property rights that they have taken while operating their business in EU as now they have to re-
apply for gaining the intellectual property rights in UK. As this will entirely start from the
beginning certain free trade practices has been evolved by UK with EU which will encourage
boosting of trading services among them and in the global corridor.
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