2INTERNATIONAL MACROECONOMYOnce it is implemented, the UK exports would be hit hard. EU was the biggest tradepartners of UK. Once Brexit is implemented, pound might depreciate further. This would makeexports cheaper and imports costlier. This would lead to more exports from UK and less importto UK. Production in the country will increase. The exchange rate would go up for UK.However, due to new trade agreements with EU, UK might have to pay more tariffs on exports.This would have a negative effect on the UK businesses. In 2015, UK exported goods of almost£133 billion to the EU, and this was half of total global exports of goods. It is predicted that, ifnew agreements are not made, UK might face a loss of almost £4.5 billion a year due toincreased tariffs of 10%. This would also make the businesses less competitive in the market.The loss of access of the single market is estimated to bring a loss of almost £75 billion. Theunemployment is also estimated to increase to 6.5% once UK finally leaves the EU, as themigration laws would change (Allen and Scruton 2017). Cyclical fluctuations in the economy refer to the alternate periods of expansion andcontraction of the economy, lasting up to 18 months or longer from peak to the trough of theeconomic cycle. During expansion, the aggregate demand increases and falls during contraction.The businesses react to contraction by cutting the costs, employment, and delaying investments.Drivers of cyclical fluctuations are attributed to level of aggregate demand, level of labor supply,exports and imports, and demand and supply side shocks (Miles, Scott and Breedon 2012). UKhas been going through economic contraction for the past few years. Till Brexit, UK wasfollowing the rules of customs union, trade rules with EU and had access to the single market.There was mobility of labor across the countries. Brexit would hamper those. Britain would haveto enter into new trade agreements with EU as well as with rest of the world as an independentnation. The aggregate demand for the British goods is expected to rise in the global market. The

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