Brexit's Economic Impact on UK Firms

This assignment examines the significant economic consequences of Brexit for businesses operating in the United Kingdom. It requires students to analyze the impact of Brexit on various aspects, including political, economic, socio-cultural, technological, legal, and environmental factors (PESTLE). The analysis should include the development of action plans for firms to navigate these changes and ensure their survival in the evolving business landscape.

Running head: POST BREXIT BUSINESS ENVIRONMENT
POST BREXIT BUSINESS ENVIRONMENT
Name of the Student
Name of the University
Author Note

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Executive Summary
This report throws light on the post Brexit vote environment of the United Kingdom. After
Britain decided to vote out of the European Union in 2016, there were several impacts on the
business environment including the political, legal and economic environment of the nation.
Some recommendations to cope up with the change have been given.

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Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
The United Kingdom..............................................................................................................3
Brexit......................................................................................................................................3
The Impact of Brexit..............................................................................................................5
Preparation for the changed environment:.............................................................................7
Conclusion..................................................................................................................................9
References................................................................................................................................10
Appendix..................................................................................................................................11

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Introduction
The business environment of the United Kingdom is market oriented and highly
developed. Being the fifth largest economy in the world, it is the tenth largest exporter of
goods and fifth largest importer in the world. However, when the vote for Brexit had been
conducted, this announcement changed the business environment drastically (Dhingra et al.
2016). The political, legal and economic environment was adversely affected the aim of the
report is to analyze the political, legal and economic environment post the Brexit
Announcement in the United Kingdom. Recommendations with reference to the alternatives
available to the business has also been made
Discussion
The United Kingdom
The UK is one of the most globalised nations and is comprising of the economies of
Scotland, Northern Ireland, England and Wales. The service sector is the dominating sector
of the UK economy and it contributes to around 80% of the GDP (Economics 2016). The
financial industry is considered to be the most important with London being the world`s
biggest financial sector. The pound sterling is the currency of UK, which is considered one of
the ten largest industries in the world.
Brexit
The Great Britain had been a member of the European Union since 1973. However,
there have been certain crises that have shaken the confidence of the Great Britain in the
European Union. The conservative Prime Minister of Britain, David Cameron was worried
about the United Kingdom Independence party, hence, to gain the confidence of anti-

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immigration voters in the party, he promised the members a vote on the British exit from
European Union in case where he won the 2015 election (Portes and Forte 2017). As
predicted by the economists, the vote of leave caused a huge economic turmoil among the
financial markets. The British pound fell by 10% to $1.35, which has been its lowest level
against the US dollar since 1985. The stock markets were also badly affected.
The reason why the exit vote had a great impact on the financial market was that the
economy of Britain had become deeply linked with that of the European markets. The
negotiation related to the exit of the British economy withdrawal would have been a complex
process and the new rules would have made it harder to conduct business between the
European Union and the United Kingdom, which threatened the London`s status as the
financial capital of the great continent of Europe (Gudgin et al. 2016)
The Brexit would also create a headache for people moving back and forth in the
continent as when a part of the EU, citizens could settle in any associated country, however,
with the exit of Britain, the nationals who were moving around easily could face certain
complications. If no other effect, Brexit would mean hassles and increased paper work.
These parties have been given a two-year window to negotiate the specific terms and
conditions. These rules that have to be renewed include rules related to migration, trade,
environment and agriculture. Hence, the negotiation could continue for a long time. This
uncertainty of results looms over the economy of Britain. The government of UK estimated
that the exit could affect the size of the economy.

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The Impact of Brexit
The Brexit bought about great amount of uncertainty and dread all over the European
continent. Various effects on the Political, Legal, Economical and Technological
environment have taken place.
Political environment of UK post Brexit
The constitutional monarchy of the United Kingdom has been governed by the
parliamentary system. The UK has always been viewed as a country where there are various
opportunities for internal as well as external entities (Whitman 2017). The public has a huge
influence on the inner working of the country. There exists a situation of Political stability
and the government is working towards improvement. However, the Negative aspects of the
political environment also exist. There is a certain level of well-hidden corruption, which
looms over the nation.
Theresa May has taken over as the new prime minister of Britain after the resignation
of David Cameron. She will be the first person who will be organization the Brexit from the
European Union; hence, various speculations on how she is going to react have been made.
May had created two new governmental departments (Wadsworth et al. 2016). The current
uncertainty of the political actions will have a negative impact on the leaders. The political
environment has a major effect on the taxes, labor and trade practices of the country. The
Brexit will be a costly affair and has to be financed. This will be caused by taxes, which will
be ultimately burdened on the people.
The trade could be affected greatly as the trade restrictions with Britain could create
problems.

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Economical Environment post Brexit
The economic environment of Britain was expected to be hit brutally after the vote for
Britain’s exit, however this has not been the case. The retail sales (Refer to Figure 1 in the
Appendices) have not witnessed a major downturn. This year itself, in August, the Great
Britain experienced its second upturn in the retail sales since the time when Brexit took place
sales since Brexit. The credit card sales have also increased. Although the consumers and
business have remained cautious and conservative in their spending habits, however they
have continued to spend and have not stopped.
The interest rates and the value of currency have decreased dramatically which has
had a huge impact on the business environment with greater importance to the international
business environment.
As the value of pound has been on a decreasing spree since the Brexit, the
manufacturers have been hit by an increased cost of importing goods. The reason behind this
might be related to interest, regulations and tax laws.
Even the export business prevalent in the United Kingdom has been hit as their costs
have hiked up. Due to this, the UK business has become less competitive in the European
Union markets and globally (Irwin 2015). If the businesses choose to maintain their
competitive edge by decreasing the price of goods, that would lead to lower profits for them.
However, it has been predicted that there will be good effects of the Brexit on the
economy as well. There will be fewer rules, regulations, and promotion of free trade. The
Britain in that case, would not need to budget the Union Budget and would have more funds
for itself.

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Legal Environment post Brexit
The United Kingdom has an unwritten constitution. The laws consist of common law,
case law and statutes. The early Roman and modern continental have an influence on the
legal system. The International Court of Justice jurisdiction is accepted by UK and there is no
review of the judicial acts of the Parliament (Irwin 2015). The British courts were earlier
subject to the European Union courts, however since the Britain has opted to exit out of the
Union, this will be subject to change. All the business in UK is bound by the laws of the
specific country they operate in.
The United Kingdom has had a minimizing bureaucracy policy since long and
policies leading to deregulating marketplaces to generate competition and improve the
services provided to the consumer. There is a strict set of laws with respect to industrial
emissions, employment, pollution control, monitoring and disposal of waste.
Financial transparency is a major requirement of certain limited companies, which
have to submit their reports to the Britain registry named ` Companies House` (Begg and
Mushövel 2016). There are various policies to protect the interest of the shareholders as well.
There are various developmental agencies like the UK Trade & Investment, the Department
of Education and Skills and more.
Preparation for the changed environment:
It is important for the business to adapt to these changes in the external environment
so that it can survive in the end. Just like the Brexit affects the business, in the same manner,
the presidential elections and other related can affect the business adversely (Dhingra et al.
2016). Hence, to cope up with the business, the business needs to take some steps like:

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Conducting research
Using various tools and techniques the business needs to research upon the various
opportunities available to it or some hindrance that can be caused to it if it does not take
certain steps.
Perform a SWOT Analysis
With the help of a SWOT analysis, the company will be able to find out its strengths,
weaknesses, opportunities and threats. While performing this, the firm can get a fare idea of
its position.
Conduct a PESTLE Analysis
When a firm conducts a pestle analysis, all the factors of the external environment
such as Political, Economical, Socio-cultural, Technological, Legal and Environmental
aspects are analyzed. This helps the firm to prepare for any event that may drastically have an
effect on the business (Busch and Matthes 2016). The businesses in Europe should have been
prepared before the vote for Brexit because this has been in the discussion since long.
Create Action Plans and Act
Once the analysis has been made the business should make should form an action plan
and act accordingly before the environment changes.

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Conclusion
Therefore, from the discussion it can be observed that the Brexit Announcement has
severally affected the economic environment of the United Kingdom. The political as well as
legal environment has also been affected by it. The firms operating in UK need to perform
various analyses and prepare themselves for the change in various legislations so that they
can survive in the end.

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References
Begg, I. and Mushövel, F., 2016. The economic impact of brexit: jobs, growth and the public
finances.
Busch, B. and Matthes, J., 2016. Brexit-the economic impact: A meta-analysis (No. 10/2016).
IW-Report.
Dhingra, S., Ottaviano, G., Sampson, T. and Van Reenen, J., 2016. The impact of Brexit on
foreign investment in the UK. BREXIT 2016, p.24.
Dhingra, S., Ottaviano, G.I., Sampson, T. and Reenen, J.V., 2016. The consequences of
Brexit for UK trade and living standards.
Economics, C., 2016. The economic impact of ‘Brexit’. study commissioned by Woodford
Investment Management.
Economics, C., 2016. The economic impact of ‘Brexit’: A paper discussing the United
Kingdom’relationship with Europe and the impact of ‘Brexit’on the British economy.
Gudgin, G., Coutts, K., Gibson, N. and Buchanan, J., 2016. The macro-economic impact of
Brexit: using the CBR macro-economic model of the UK economy (UKMOD). Centre for
Business Research Working Paper, (483).
Irwin, G., 2015. BREXIT: the impact on the UK and the EU. London: Global Counsel.
Nunez-Ferrer, J. and Rinaldi, D., 2016. The Impact of Brexit on the EU Budget: A non-
catastrophic event.
Portes, J. and Forte, G., 2017. The economic impact of Brexit-induced reductions in
migration. Oxford Review of Economic Policy, 33(suppl_1), pp.S31-S44.

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Wadsworth, J., Dhingra, S., Ottaviano, G. and Van Reenen, J., 2016. Brexit and the Impact of
Immigration on the UK. Centre for Economic Performance. LSE, pp.34-53.
Whitman, R., 2017. Devolved external affairs: the impact of Brexit. Europe programme,
Chatham.
Appendix
Figure 1: Retails sales Index from 2007-2016( Source: Busch and Matthes 2016).