Brexit Effect on Global Business Environment - Assignment

Running head: BREXIT EFFECT ON GLOBAL BUSINESS ENVIRONMENT
BREXIT EFFECT ON GLOBAL BUSINESS ENVIRONMENT
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1BREXIT EFFECT ON GLOBAL BUSINESS ENVIRONMENT
Executive Summary
This report is based on the analysis of the business environment of United Kingdom after the
decision taken by the people of the country to leave the European Union. This decision is
referred to as Brexit or British exit. The decision was taken by the prime minister of UK
along with British citizens in the year 2016. The actual exit is scheduled to take place in the
year 2019. The discussion in this report is based on the political, legal, economic, social and
environmental aspects of the country after the exit of UK from the European Union. The
report has been concluded with the learning that the Brexit phase will impact the business
environment in many negative ways and will cause uncertainty in the business environment.

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Table of Contents
Introduction....................................................................................................................3
Impacts of Brexit on the different aspects of the European business............................4
Economic impacts of Brexit.......................................................................................4
Political impacts of Brexit..........................................................................................4
Legal impacts of Brexit..............................................................................................5
Environmental impacts of Brexit...............................................................................6
Social impacts of Brexit.............................................................................................6
Conclusion......................................................................................................................7
References......................................................................................................................8

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Introduction
The term “Brexit” mainly refers to the decision made by the people of Britain to make
an exit from the European Union or EU. This process was also referred to as the British exit,
which was termed as Brexit. This historic decision was taken in the year 2016, in the month
of June. The decision that was made by the people of Europe had been a reason for
celebration for the British citizens across the globe and had a shocking effect on the economy
on a global scale. The Brexit decision will be effective from the 29th of March, 2019. The
European Union has been formed by the political and economic partnership of 28 countries of
Europe. Britain is a significant part of the European Union after the World War II had taken
place (Andersson and Nilsson 2016). The negotiations related to the Brexit decision are
already in progress and they are many issues that are to be discussed. This decision however
will have an immense effect on the global economy. The uncertainty that will follow the exit
of Britain is the biggest setback for the business environment in UK.
Impacts of Brexit on the different aspects of the European business
Economic impacts of Brexit
The instant impact of the Brexit decision taken by British Prime Minister Theresa
May will be on the agreement related to trade relations with the other countries. The exit of
Britain from the EU will lead to the burden of heavy amount of taxes on the imports and the
exports of the country. The custom checks for the imports and exports will also increase and
this will create immense chaos in the British ports which are already busy (Basedow 2017).
The new rules and regulations related to the entry and exit of the goods and products will lead
to delays and the manufacturers will be affected and will have to face loss. This will
negatively affect the business reputation of the country and in turn will lead to a fall in the
economy. The decision will lead to a fall in the GDP of the country. The currency of Britain

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dropped by 10% to 15% after the decision of the exit was taken in the year 2016. This fall is
expected to increase after the actual incident takes place in the year 2019. The restrictions
related to trade and the economic condition of the country will further lead to the rise of the
prices of the products thereby causing inflation. The economic condition of the country is
likely to crumble and the foreign investment will also decrease and companies can take
decision to leave UK (Coulter and Hancké 2016). This will lead to the formation of a risky
and uncertain business environment in the country.
Political impacts of Brexit
United Kingdom is an active member of the EU and has political and economic
relations with the other European countries present in the EU. England is involved in the
balancing role that it has in the decisions that are taken by the European Union, however, the
country was not too much involved in the issues related to the continent (Sampson 2017). The
United Kingdom was a voting member with full rights in the European Union. However,
England was exempted from the policies which they found were enmeshing like, the
Schengen zone, home and justice affairs cooperation, the euro and many more. UK had the
power to influence the decisions taken in the European Union and even slow down the pace
of some decisions. It can therefore be said that UK had the best of the both situations as a
member of the European Union (Davies 2016). The UK government has taken the decision to
leave the European Economic area and the Customs Union along with the other requirements
that are discussed in the referendum of Brexit. The members of the European Union followed
the same set of rules and regulations related to safety of food, protection of intellectual
property, protection of the consumers and aviation. The exit of UK from the European Union
will therefore lead to a new set of rules and the country has to negotiate every deal separately.
The Brexit phase will therefore lead to a political uncertainty and will negatively affect the
business environment (Dhingra et al. 2016).

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Legal impacts of Brexit
The exit of United Kingdom from the EU will have huge legal implications as well.
The future relationship of UK with the European Union is also uncertain and there are many
legal procedures related to this decision. The EU treaties mainly state that the governing body
considers the exit of any member from the union. The member has to bring the decision to the
notice of the governing body and thereby give two years of time to EU to negotiate
withdrawal terms. The rules and regulations of the governing body will face many changes in
this process. The relationship model that UK can seek to maintain with EU is as discussed
further. UK can join the Economic Area of Europe and get some amount of access in the
internal market, so that they can trade with some of the European countries without
restrictions (Djankov 2017). UK can also make bilateral agreements with EU so that they can
access to the market of some specific sectors within the European countries. UK can maintain
customs union with the EU, so that UK can export goods to the member firms of EU without
ant trade restrictions, however, UK will not bound to financially contribute in the EU. UK
can also seek to make agreements related to free trade with the European Union that will
cover certain services and goods (Ford 2016). These are various legal implications that can
take place in the UK market following the Brexit effect.
Environmental impacts of Brexit
The Brexit decision of UK will also impact the environmental factors of the country.
The history of Britain with respect to environment is not quite good. There were many
failures as well as success points for Britain regarding this aspect. The conservation of the
plant and animal species of Britain involved lot of research. The pollution levels of Britain
increased in the year 1950 due to the huge production of coal. The turning point in the
environmental aspect of Britain came in the year 1972 when it joined the EU. In the year
1980, the policies of Britain involved environmental issues and the limits of pollution and

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environment was an important part of the legislative system of the country (Gächter, Gruber
and Riedl 2017). The pollution levels were decreased and the air of Britain also became clear.
The EU therefore had a positive effect on the environment of England. The economic risk
related to the green market in Britain was much less as compared to the other countries as it
was a part of the EU. The choice of Britain to stay or leave the EEA or the European
Economic Area will affect the laws related to the environment of the country. The decision of
UK to leave the EEA will impact the power of the country to make the laws related to the
country’s environment. The planning and implementation process of the new set of laws for
the environmental conservation of UK will be a long process (Hatzigeorgiou and Lodefalk
2016). This is a huge risk that is being taken by the UK government.
Social impacts of Brexit
The Brexit decision taken by the UK government will have a huge social impact on
the country as well. Before the decision of the exit was taken in the year 2016, there was a
culture of intolerance and extremism in the country. The situation after the proposal of exit
became worse as the practices related to prejudice, discrimination and stigma was rising fast.
The assault against the ethnic and religious minorities and the migrants are also increasing in
the recent times. The discrimination against the minorities in the society is on the rise and this
has led to racism. The rate of violence, suicide, and the cardiovascular diseases in on the rise
among the sexual minorities (Jafari and Britz 2017). The discrimination related to the mental
disorders has also increased. The political and social division that is caused due to the Brexit
effect have become aggressive sources of discrimination among the citizens of England. The
decision of UK to leave the EU will have an impact on the important issues related to social
care and health. The Social care system will be the most affected area due to this decision.
The rules related to the nationals of EU working in NHS will be the highest priority with
respect to the Brexit decision (Portes and Forte 2017).

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Conclusion
The report analysis shows that the decision of Brexit taken by the British citizens will
affect all the aspects of the country related to its business prospects. The decision is not a
small one and will affect not only Britain, it will have an adverse effect on many other
countries performing business operations with UK. The economy of UK is likely to crumble,
as the fall of the value of its currency after the Brexit decision is a negative effect. The
foreign investments are also expected to fall as the situation after the Brexit phase will be
uncertain. The legal and political uncertainty of the country will also have a negative impact
on the business situation of UK. The report can be concluded by saying that the Brexit
decision of UK will affect the business environment immensely and therefore bring a fall in
the economy of the country.

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References
Andersson, S. and Nilsson, F., 2016. What can fixit after Brexit? An empirical study of the
economic effect on UK trade, following an exit from the European Union.
Basedow, J., 2017. BREXIT and business law. China-EU Law Journal, 5(3-4), pp.101-118.
Coulter, S. and Hancké, B., 2016. A bonfire of the regulations, or business as usual? The UK
labour market and the political economy of Brexit. The Political Quarterly, 87(2), pp.148-
156.
Davies, J., 2016. Are business school deans doomed? The global financial crisis, Brexit and
all that. Journal of Management Development, 35(7), pp.901-915.
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.
Djankov, S., 2017. In macroeconomic terms the initial effects of Brexit on the country’s
financial sector are modest: UK GDP may shrink by 0.5 percent and employment by 0.2
percent. These estimates are smaller than those predicted by the government prior to the
referendum. 2 In April 2016 the UK Treasury predicted declines of£ 38 billion in revenue and
up to 230,000 jobs in the financial sector as a consequence of Brexit. These effects may
materialize in the longer term.
Ford, M., 2016. The Effect of Brexit on Workers' Rights. King's Law Journal, 27(3), pp.398-
415.
Gächter, M., Gruber, A. and Riedl, A., 2017. Wage Divergence, Business Cycle Co‐
Movement and the Currency Union Effect. JCMS: Journal of Common Market
Studies, 55(6), pp.1322-1342.

9BREXIT EFFECT ON GLOBAL BUSINESS ENVIRONMENT
Hatzigeorgiou, A. and Lodefalk, M., 2016. The Brexit Trade Disruption Revisited. The Estey
Journal of International Law and Trade Policy, 17(1), pp.41-58.
Jafari, Y. and Britz, W., 2017. Brexit–an economy-wide Impact Assessment looking into
trade, immigration, and Foreign Direct Investment. In 20th Annual Conference on Global
Economic Analysis, June (pp. 7-9).
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.
Sampson, T., 2017. Brexit: The economics of international disintegration. Journal of
Economic Perspectives, 31(4), pp.163-184.