The Impact Of The Brexit On The Economy

Running head: POST BREXIT INTEGRATION BETWEEN EU AND UK
Post Brexit Integration between EU and UK
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POST BREXIT INTEGRATION BETWEEN EU AND UK
Introduction
The United Kingdom (UK) or Britain decided to leave the 27-member union EU through
following a referendum in June 2016, which is known as Brexit (Gov.uk. 2020). It will enable
Britain to come out of the single market and customs the union of the EU. There were various
contradictions associated with the exit of the UK from the EU. It also created turmoil related the
relationship of the UK with the EU post Brexit. However, the date of leaving of the UK from the
EU has not been finalized yet and post Brexit deal between two have not been decided. The
effects of the Brexit will depend on the nature of tie up between two parties the EU and UK.
There is a possibility that the both parties may not agree upon on any term after the transition
period, which is known as no deal Brexit (Dhingra and Sampson 2016). Moreover, the impact of
the Brexit on the economy of UK will vary with respect to the terms being signed between both
parties. Therefore, the level of integration between the EU and UK may generate opportunities
and threats, which will be assessed in this paper. The post Brexit agreements related to free trade
and World Trade Organization (WTO) will also be examined.
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There are various options related to the future trade relations between the EU and UK.
The option for integration will be implemented after the completion of the Brexit process and
after UK has left the EU. Both parties will take the decision of the potential relationship through
negotiations during the transitional period from March 2019 to December 2020 (Mulabdic,
Osnago and Ruta 2017). The debatable subject is significant from the economic and political
aspect. Previously the EU and UK were in an intense economic and trade relationship, which
will be affected after the Brexit. The UK and EU were the main trading partners of each other.
However, it is essential to emphasis on broader perspective through institutional, political and

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POST BREXIT INTEGRATION BETWEEN EU AND UK
legal aspect along with economic post Brexit. There exists two distinct paradigms that are
important in this regard such as trade liberalization and market integration. It is crucial to explore
those paradigms to understand the pros and cons associated with the integration between the EU
and UK after Brexit. This paper also taken into consideration the models that plays a major role
on the relationship of the UK and EU post Brexit (Dhingra et al. 2016). These modes are the
WTO model and deep and comprehensive free trade agreement (FTA).
As there are various models available to opt from, probably the most preferred one for the
UK government is the Deep and comprehensive FTA (DCFTA). The legal side analysis of the
DCFTA states that the agreement could be concluded by the EU acting alone as it would come
within the exclusive competence of the EU related to TFEU provisions on the common
commercial policy (Feng et al. 2017). However, it will depend on the intensity of the DCFTA.
There involve two limitations with the implementation of the DCFTA post Brexit, which are the
related dispute settlement provisions and inclusion of investor protection. The main confusion in
this case is whether the agreement will be concluded by the mixed agreement or EU alone.
Though, the foreign direct investment will be covered under the CCP, the indirect investment
will not be covered. The probable investor’s protection of the EU-UK DCFTA will be based on
mixed agreement as the dispute settlement system set up by the EUSFTA will bypass the
domestic court system (Europa.eu 2016).
According to the government of the UK, DCFTA will maintain both the important
paradigms like market integration and trade liberalization. In addition, as per government, it will
manage the gradual divergence of the regulatory framework between the UK and EU (Mulabdic,
Osnago and Ruta 2017). However, a mere FTA will not solve the problems of customs and
regulations in terms of frictionless trade. It can be managed with the help of border controls. It