International Business: Analyzing the Economic Impact of Brexit on UK

This report provides an in-depth analysis of the economic impact of Brexit on the United Kingdom. It begins by outlining the context of Brexit, which is the UK's withdrawal from the European Union, and highlights the current economic problems and scenarios stemming from this decision. The report justifies the study by emphasizing the importance of understanding Brexit's effects on the UK economy, particularly concerning economic indicators such as GDP, inflation, and unemployment. It examines various academic studies and articles to support its findings, including the impact on employment opportunities and the service sector. The report also applies data to economic models to illustrate the negative consequences of Brexit, such as reduced GDP growth and increased inflation. The conclusion summarizes the overall economic damage and losses caused by Brexit, emphasizing the increase in unemployment, borrowing costs, and exchange rates. The report also discusses approaches to dealing with the problems, such as increasing exports and adjusting monetary and fiscal policies. Ultimately, the report highlights Brexit as a major challenge for the UK and its economy.

ECONOMICS OF
INTERNATIONAL
BUSINESS MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Context of the news ....................................................................................................................1
Current problem /scenario ..........................................................................................................1
Justification of the Study.............................................................................................................2
Importance of this analysis.........................................................................................................3
Economic indicators ...................................................................................................................3
Approaches to dealing with the problems...................................................................................4
Academic studies supporting the case study .............................................................................4
Application of data to Models ....................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Brexit is the situation in which the UK is withdrawal from the European union. In This
report it will include the effect of Brexit on the British economy through the use of various
articles ton identify the information about the consequences which are being Faced by the
economy due to exit of UK from European union. In this report it will provide information about
the changes which will take place due to exit of UK from European union as the economy will
have to face a great downfall due to Brexit as it will lead to reduction in the per capital income of
the country.
ECONOMIC EFFECT OF STALLED BREXIT DEAL
Context of the news
Brexit has led to the economic downturn which has affected the economy in negative
way. It is identified through the article "What effect has Brexit had on the UK economy?" that
the Brexit will reduced the GDP of the country and also the inflation will be higher. Due to the
Stalled Brexit the public borrowing will rise which will lead to the high cost of borrowing. The
Bank of England found that the business investment has slowed sharply. Also, It has show the
impact of Brexit on the employment opportunities because it shows that the Brexit will lead to
increase in the unemployment which will reduce the economy growth. Another article "UK
economy ‘stalls’ over Brexit and global economy fears" provided in formation about the UK
service sector which shows that the UK economy is rise of stalling due to Brexit. It shows that
the service sector has been greatly affected due to uncertainty caused by Brexit. It is been
identified that the growth of 0.1% as opposed to that the service sector before Brexit was the
greatest largest sector that contributed to the economy.
Current problem /scenario
The Current problems regarding Brexit as identified by the Articles is that it has lead to
reduction in employment opportunities because with the vote out of UK from European union
will increase the unemployment in UK that will affect the economy significantly. The problems
show that Brexit has lead to the economic downturn for the UK which has increase the
consequences. Brexit will make the financial market more sensitive it will reduce the per capita
income for the UK and also the economy will be devastated due to the Brexit impact. UK is in
recession due to Brexit which has lead to increase in the inflation and the reduction in the GDP.
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From the above graph it identified that the UK economy is devastating due to the impact
of Brexit which has slow down the GDP and shows that the Growth of the UK economy has
been slow down with effect of the Brexit. It shows the In 2018 the growth rate of UK was more
as compared to 2019. The UK will be voted out on 29 march which means the year 2019 will be
more risky and lead to recession for the UK economy.
Justification of the Study
This study is based on the Effect of Brexit on the UK economy which is discussed
through the help of Articles. The information for the topic is selected from the following
sources :
 What effect has Brexit had on the UK economy?
 UK economy ‘stalls’ over Brexit and global economy fears
This report has identified the information for the topic from this sources as it has
discuses about the problems which has been faced by the UK economy due to the impact of
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Illustration 1: UK growth slow down
( Source : What effect has Brexit had on the UK economy, 2019)

Brexit. According to (Campos and Coricelli, 2015), The Brexit has negatively affected the UK
economy as it has lead to the increase in the unemployment and reduction in the per capita
income of UK which has affected the UK economy to the great extent. The Brexit deal has
changed which include the joint agreement that include both sides to develop technological
solutions for the Irish Border By the end of 2020. Backstop is the the last resort that keep the
open border on the Island of Ireland. Brexit deal refers to the Withdrawal agreement which is
formed for the exit of the UK from the European union (Sampson, 2017). If UK leaves without a
deal than it will means that it has not followed the Withdrawal agreement and their will be no
transition period after the UK leaves.
Importance of this analysis
The analysis provided understanding that UK economy if Exit the EU without the deal
than there will be no transition period between the UK and EU and the EU laws will be stopped
applying to UK. It will assist in identifying the ways through which there will be reduction in
the negative impact of the Brexit deal on the UK economy (Wadsworth and et.al., 2016). The
Brexit is the ongoing topic which is current problems faced by UK economy has it has lead to the
various changes that will be implicated to the UK due to Exit from the European union
(Whitman, 2016). This analysis is important because with the help of this study it will provide
understanding about the factors which are being affected due to Brexit.
Economic indicators
The economic indicators refers to the factor of economy on the basis of which the
economic growth and slowdown is measured. The followings er the economic indicators of the
Brexit which shows the economic downturn in the UK due to Brexit.
 Gross domestic product : As per the information identified it shows that due to Brexit
the DGP of UK will be 3.6% smaller which means there will be reduction in growth of
the economy as forecasted GDP shows due to the impact of Brexit (Hobolt, 2016).
 Inflation : It refers to the increase in the prices of the goods and services provided in the
economy. It shows that the UK economy will have to face the higher inflation to the
affect of Brexit. In the years 2017, the prices rose were close of 3% which was twice
than was expected pre- referendum (Inglehart and Norris, 2016).
 Unemployment : Due to the Brexit the UK economy will have to face increase in the
unemployment of around 500000 that means the people of UK will have less
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employment opportunities that will affect the UK economy to the great extent (Goodwin
and Milazzo, 2017).
Approaches to dealing with the problems
Brexit is the ongoing problems which is being faced by UK economy. The problem
identified on the UK economy with reference to Brexit consist of increase in inflation, increase
in unemployment, lower GDP, lower per capita income which are the economic indicators that
shows that with the advent of Brexit the UK economy will face to Face recession (Ramiah,
Pham and Moosa, 2017). The UK economy for dealing with the problems of unemployment can
increase the exports which will assist in growth of the small scale businesses in UK which will
help in increasing the self employment that it lead to reduction in the Unemployment.
Moreover, the government of UK by providing the people with part time jobs can also
leads to creating more employment opportunities in the country that will help in increasing the
employment in the country and will help in economic growth of the country. Also, the bank
interest rates should be reduced that will help in increasing the public finances which will assist
in increasing the public finance in the country (Virdee and McGeever, 2018). The approach for
dealing with the problems of Inflation can be made by through the help of monetary policy and
fiscal policy of the country that will help in reducing the inflation which will assist in the GDP
growth of the country and make the stable economy in the Brexit period.
Academic studies supporting the case study
According to (Dhingra and et.al., 2016), Brexit had has great impact on the foreign direct
investment of the UK because with the vote out of UK from the European union the Companies
from the different countries have reduced in investing in the UK companies due to the reduction
in the GDP and higher inflation which has a negative impact on the business. The case study of
impact of Brexit on the UK economy is supported by the information gathered through the
source of Article which is "What effect has Brexit had on the UK economy?" that has provided
information about various factor which have been affected due to Brexit as it has slow down the
economic growth of the country.
It has provided understanding that the Brexit will; lead to increase in the unemployment
which will affect the income level of the people residing in UK . The economy will be affected
due to increase in the inflation level which in turn will leads to reduction in the spending of the
people as the prices of the goods and services will rise. Another sources from which the
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information is gathered include article "UK economy ‘stalls’ over Brexit and global economy
fears" which has provided information about economic downturns that have resulted due to
Brexit.
Application of data to Models
From the above graph, it can be interpreted that due to the Brexit they entire economy of the UK
has fallen down. The above graph clearly indicates that after 2014 the gross domestic product of
the country has continuously fallen down the companies and their operations are directly
affected. As because of this case many people losses the job or unemployment rates tends to
increase which results in fall in the rate of workers and leads the organisation in reduction of
their production of goods and services. Hence, less production brings a great fall in GDP of the
nation. UK suffers a lot because of the Brexit. It leads to great increment in the unemployment
rate which leads ll other organisation to stop or slows down their production and without skilled
workers organisations are not able to perform their operation's which ultimately leads in falling
GDP.
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Illustration 2: UK GDP
( Source : UK GDP , 2017)

From the above graph . It can be illustrated that Brexit cam with many problems such ad=s
increasing unemployment rates, increasing inflation rates, borrowing rates, exchange rats all
these rates are highly increased which leads top great loss to the economy of the UK. from the
above graph it can be noticed that from the year 2015 the inflation continue to increase in
rate .this increase in inflation brings falling in the purchasing power of the customers as the
highly charged goods are not affordable by the customers which leads to fall in the living
standard of te people. In addition to this, the organisations also fails to earn good amount of
profit as there is less or no demand of the highly charged products and services in the economy.
Brexit Brings a great loss to the economy of the UK. The increasing inflation affects complete
economy. it also leads to fall in the productions off the good and services ,in addition to this, it
causes a great fall in gross domestic product of the economy also. Hence, national income also
falls. Inflations leads to make many employees and workers unemployed which affect their
families too. Brexit is basically the grate and major challenge for complete UK and its economy.
Somewhere it is clearly stated that Brexit brings fall in GDP, increase in unemployment rates and
rise in the inflation.
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Illustration 3: Inflation UK
( Source: Inflation UK, 2017)

CONCLUSION
From the above report it can be concluded that the Brexit has brings severe damage and loss to
the complete economy of the UK. The severe problem, its effects, impacts are also explained in
this report. Brings great increase in the unemployment rate, the borrowing and exchange rates
goes up. The contribution towards the GDP has fallen down. Inflation tends increase at the
highest level in the economy.
Furthermore, it also concludes the changes and impacts on the UK economy because of the
using various graphs and their interpretations. The current problems of the UK and about the
deals is also explained in the above report. The report also conclude about the Approaches to
dealing with problems and their explanations which will provide different approaches for solving
and dealing with caused problems.
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REFERENCES
Books and Journals
Campos, N. and Coricelli, F., 2015. Some unpleasant Brexit econometrics. VoxEU. org.
Dhingra, S. and et.al., 2016. The impact of Brexit on foreign investment in the UK. BREXIT
2016. 24. p.2.
Goodwin, M. and Milazzo, C., 2017. Taking back control? Investigating the role of immigration
in the 2016 vote for Brexit. The British Journal of Politics and International Relations.
19(3). pp.450-464.
Hobolt, S.B., 2016. The Brexit vote: a divided nation, a divided continent. Journal of European
Public Policy. 23(9). pp.1259-1277.
Inglehart, R.F. and Norris, P., 2016. Trump, Brexit, and the rise of populism: Economic have-
nots and cultural backlash.
Ramiah, V., Pham, H. N. and Moosa, I., 2017. The sectoral effects of Brexit on the British
economy: early evidence from the reaction of the stock market. Applied Economics.
49(26). pp.2508-2514.
Sampson, T., 2017. Brexit: the economics of international disintegration. Journal of Economic
Perspectives. 31(4). pp.163-84.
Virdee, S. and McGeever, B., 2018. Racism, Crisis, Brexit. Ethnic and Racial Studies. 41(10).
pp.1802-1819.
Wadsworth, J. and et.al., 2016. Brexit and the Impact of Immigration on the UK. CEP Brexit
Analysis. 5.pp.34-53.
Whitman, R. G., 2016. Brexit or Bremain: what future for the UK's European diplomatic
strategy?. International affairs. 92(3). pp.509-529.
Online
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Inflation UK. 2017. [Online]. Available through
<https://data.worldbank.org/indicator/NY.GDP.DEFL.KD.ZG?
end=2017&locations=GB&start=2007&view=chart>.
UK economy ‘stalls’ over Brexit and global economy fears. 2019.[Online].Available
through :<https://www.bbc.com/news/business-47127927>
UK GDP. 2017. [Online]. Available through
<https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?
end=2017&locations=GB&start=2007>.
What effect has Brexit had on the UK economy. 2019. [Online]. Available through
:<https://www.bbc.com/news/business-47168866>
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