Political Science Case Study 2022

Running head: POLITICAL SCIENCE
POLITICAL SCIENCE
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Introduction
Impact on the British financial system of Brexit that is to leave the European Union
(EU) has been discussed intensively prior to the election and is still being one of the
important areas of discussion. These discussions are going on as it is still unclear which type
of an exit agreement Britain is likely receive which will be critically determined by
agreements or discussions with the European Union1. In actual fact, the expenses and
welfares of Britain's membership of the European Union have been considered as a
provocative issue prior to the decision taken to accept a referendum. Although, it is very early
to determine the concrete impact of the monetary effects of Brexit on the British financial
system, specifically as the nation is still a vital part of the European Union. Nonetheless, it is
likely to predict the potential outcomes and benefits of Brexit on the European Union. The
following paper will analyse the potential cost of Brexit on the European Union related to the
possible charges on export goods to the European Union, the severe impact on the city of
London, which is usually considered as a key support of the British financial system and the
loss of accessibility to the major EU market. Furthermore, the paper will analyse the future of
Great Britain.
Discussion
Impact of brexit on E.U
Critical discussions on the impact of Brexit have examined Brexit’s effect on trade
and manufacturing foreign investment financial services as well as the public sector.
However, these discussions have rejected the extreme claims which have been made
regarding the cost and benefits of Brexit for the British financial system, as missing in
evidential basis. Considering the trade situation of the European Union, it has been noted that
EU is currently regarded as the destination. This is essentially for partial proportion of all
British goods exports and bearing in mind the countries which trade in self-regulation with
Britain. In addition, as they have permitted or free trade agreements with the European Union
it can be claimed that around 65% of goods exported from Britain are associated with the EU
membership. The impact of Brexit on trade and commerce rely greatly on what type of
agreements Britain will make with the EU as well as non-EU countries. It has been noted in
the studies of other scholars that a favourable trade agreement would be attained later to
Brexit because of the benefits of both sides in sustaining an integrated trade arrangement2.
Furthermore, a favourable view has been observed regardless of the potential cause related to
1 Goodwin, Matthew J., and Oliver Heath. "The 2016 referendum, Brexit and the left behind: An aggregate‐level
analysis of the result." The Political Quarterly 87, no. 3 (2016): 323-332.

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the talents as per the highly favoured state rule as well as the rules of origin. Optimism or
buoyancy in regards to trade and commerce has been attributed to declining of the tariffs on
an international level, which has further been considered as the decline in the manufacturing
industry, as well as the falling importance of Europe. However after the Brexit, the
disagreement states that Britain possibly will discover greater advantageous trade agreements
with non-EU nations similar to the way initiated by Switzerland.
As per the view of scholars regardless of the impact of the outcome, different sectors
might get affected in varied ways. For example, the financial service sectors of the EU might
lose proximately after the exit of Britain than other sectors of the economy. Meanwhile, cities
competitive benefit is observed on above autonomous contact to the single economy.
However, considering trade and commerce, Britain has the implication to be in the position to
negotiate agreements with thriving markets, which can recompense for the financial service
sectors in the upcoming days. Drawing relevance to these implications it can be noted that the
impact of Brexit on the economic sector of the EU is likely to be unconstructive in the short
term and optimistic in the end. Considering the public sector, the constructive impact of
Brexit is that the British government has the potential to save approximately £ 10 million
yearly on its aid to the budget of the European Union which can be utilised in order to
improve the infrastructure. Such a progressive effect however has propensity for growth
prospects, which shows a lot of positivity for scholars studying the effect of Brexit on the
European Union. On the other hand, scholars are of the opinion that the aggregate effect on
development and employment creation will be unassumingly constructive which is a robust
contribution while comparing other studies which show negative impacts of varying degrees.
It has been estimated that the cost of Brexit to be almost 2.2 percentage points in growth and
its expectant situation and for their between 6.3% and 9.5% in its negative explanation. In
contrast, scholars have estimated net value to Britain of EU membership to be in the area of
around 45% of GDP, which is estimated to be between £62 and £78 billion per year3.
Furthermore, other scholars have indicated that Brexit has the propensity to cut the size of the
British economy by around 2.25% comparative to the estimation, which has exhibited a
rather negative scenario of the influence of Brexit on the European Union.
2 Ramiah, Vikash, Huy NA Pham, and Imad Moosa. "The sectoral effects of Brexit on the British economy:
early evidence from the reaction of the stock market." Applied Economics 49, no. 26 (2017): 2508-2514.
3 Kee, Hiau Looi, and Alessandro Nicita. Short-term impact of Brexit on the United Kingdom's export of goods.
The World Bank, 2017.