The Impact of Brexit on Foreign Investment in UK

THE IMPACT OF BREXIT ON FOREIGN INVESTMENT IN
UK
RESEARCH OBJECTIVE
DATA ANALYSIS METHOD
DATA COLLECTION METHOD
LITERATURE REVIEW
EXPECTED OUTCOME
BACKGROUND
Brexit can be considered as the phenomenon,
which caused withdrawal of United Kingdom
from European Union. The Phenomenon
occurred on 23rd of June’2016. The reason for
the British-exit was the realization about the
benefits to be associated with the European
Union, as the residents in U.K (Bachtler and
Begg 2017). . believed that the association with
the unified monetary body did not projected
benefits over the free movement of the facility
of immigration (Jablonowskiet al. 2018). The
Prime Minister of U.K., Theresa May submitted
Article 50 for the withdrawal notification to
European Union (Crafts 2017). Currently, the
European Union and U.K.have time until 29th of
March’2019 for negotiating various terms to
come to an agreement (Tetlow and Stojanovic
2018). There are three options on making an
agreement on negotiation. First is to keep the
deal of the Prime Minister. Second, exit without
a deal, which can result in the blockage of
ports, airlines and imported goods will run short
and third conducting a re-vote. The research
paper will stress on the impact of Brexit on
Foreign Direct Investments on U.K (McCusker
and Gunaydin 2015). It is believed by scholars
that Brexit will be influencing economic growth
but the information about regarding the
implication of Brexit on FDI in UK is still
unknown.
Impact of Brexit on economic structure of UK:
There are journals, which have discussed about the reshaping of UK’s
economic structure after the implication of Brexit. UK is known for
exporting services like financial, media and IT as well as goods like cars,
which is facilitated through imported capital, technical knowledge as well
as inputs from various opportunities (Greenaway and Milner 2019). The
economic size and geographical location of Europe reflects the potential
of being trading partner of UK. The motivation of FDI in the country is
received from the convenience of selling goods and services to high-
income groups in rest of European Union (Dhingra et al. 2016). Thus, UK
receives lesser opportunities from the new trade agreements outside
European Union. The Treasury of UK believes that European Union
portrays a positive impact on the trade (Latorre et al. 2019). Therefore,
after Brexit is implicated, UK will face a major loss. Brexit is believed for
reducing the per-capita income level of UK. Frictions for trade at border
as well as reduced rates of migration is estimated by government
(Jablonowski et al. 2018). GDP is also expected to fall at the rate of 3.9
percent in the next 15 years which sums up to lowering 100 billion
pounds each year. The phenomenon will cause negative effects on open
investment and trading activities with European Union and can disrupt
the opportunities from US (Portes and Forte 2017). The shift of UK from
standards of EU and will result in increase of non-tariff standards. This
will cause harm in regards with the UK’s ability to sell services to EU
countries (Kierzenkowski et al. 2016).
The research paper will be using both secondary and
primary data. Primary data will be collected by
conducting interviewing officials from financial services
sector and economic sector (Kumar 2019). Interview
method will help in receiving direct experiences of
financial and economic sectors for understanding the
Foreign Direct Investment scenario. UK banking industry
will be selected for utilizing convinience judgement of
sampling managers from 5-6 banks. The invitations will
be sent by email. For conducting the interview method,
around 30 officials will be approached, which depends
on the given time frame. Secondary research will be
conducted by assessing the already available
articles/journals and research papers on the similar
concerns.
Research philosophy can be defined as the belief for
the manner that depicts the data for a phenomenon
(Brexit) is collected, analysed and utilized for further
research (Saunder et al. 2015). Interpretivist approach
will be used for qualitative research as it will collect and
data from the responses on specific group and
individuals involved in FDI (Saunder et al. 2015).
Inductive approach will be selected for concluding a
general idea of the impact of Brexit on FDI in UK by
using facts and figures (Saunder et al. 2015).The
responses from interviews will be analyzed by
categorizing the responses in specific groups and
assessing the categories through graphical
representations. The responses collected from the
respondents will be present the pattern of experiences
in an industry in regards with the opportunity of
investment in foreign trade activities. SPSS tool will be
utilized for acquiring a comprehensive understanding of
the topic (McCusker and Gunaydin 2015). Thematic
Analysis approach will be adopted for understanding,
examining and recording data sets.
RESOURCES
In this paper, the data will be collected through
qualitative data collection method. Secondary data will
also be used by peer reviewed articles and already
available research papers. Interview methods can be
conducted to understand the impact of Brexit on
Foreign Direct Investment. After collecting the
responses, the data will be assessed through graphical
representations. The data from the secondary research
will present the overview on the decision of Brexit and
the impact on various industries.
Challenges caused by Brexit:
Brexit without the presence of trade agreement will
eliminate the tariff-free status of Britain with other
European Union counties. Tariff will increase the export
costs (Busch and Matthes 2016). Around 5,000 jobs
can be at lost because of Brexit. Companies of UK may
loose the ability of bidding on the public contracts in EU
countries. Banking sector of UK will significantly face
loss (Bouoiyour and Selmi 2018).
Advantages and Disadvantages of Brexit to UK for
FDI:
There are research paper which presented the benefits
and downfall of Brexit on FDI of UK. The disadvantages
of Brexit includes the loss of foreign investment
opportunities of UK. The membership with UK acted as
an incentive for UK because of the access to free
European markets. The privileges will be disturbed with
the detachment of Britain from European Union.
Another disadvantage identified by the paper was the
compromise on the UK security as the benefits of
experiencing shared intelligence and security benefits
will be compromised with the phenomenon of Brexit
(Dhingra et al. 2016). The influence of Brexit on stocks
and inflows of Foreign Direct Investments rely on
multinational activities in UK. The increasing trade costs
in between European Union and United Kingdom will
present the opportunity of serving the markets of UK as
it will be more attractive in comparison with other
regions of European Union (Los et al. 2017).
• To understand the impact of Brexit on
Foreign Direct Investment in U.K.
• To understand the implications of Brexit
for Foreign Direct Investment in
Financial sector of UK.
• What is the impact of Brexit on Foreign
Direct Investments in U.K.?
• What is the implications of Brexit on FDI
in Financial sector of UK?
RESEARCH QUESTIONS
RESEARCH LIMITATION
• The accuracy of the deduced data will be
compromised in the limitation in the period of the
research
• The number of respondents approached for the
research will be less because of restricted time frame,
which can minimize the quality of the research work
as the topic requires a detailed discussion for
understanding the actual impact of the
implementation.
• Questioning the officials from the automobile and
financial services sector may not be allowed.
• Expected outcome from the research paper-
• The understanding of the potential impact of Brexit on
the Foreign Direct Investments in UK.
• The understanding of the impact of Brexit on the
financial sector of UK.
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