Macroeconomics and Brexit: Assessing the Impact on UK Living Standards

This report provides a comprehensive analysis of the impact of Brexit on UK living standards, examining relevant macroeconomic policies and theories. It discusses both the positive and negative effects of Brexit, supported by current data illustrating its impact on various economic indicators such as GDP growth, trade, and inflation. The report also explores the application of fiscal and monetary policies in response to Brexit, along with theories like constructivism, bureaucratic policies, and cognitivism to understand the political and economic context. It highlights the challenges and opportunities arising from Brexit, including its effects on employment, business operations, and consumer spending power, offering insights into the complexities of navigating the post-Brexit economic landscape. Desklib provides access to similar reports and study resources for students.

Principles and applications of
macroeconomics

TABLE OF CONTENT
INTRODUCTION..................................................................................3
Explanation and analyzing policies and theories relevant to Brexit positive and negative
effects on standards of living in UK ...........................................................................................3
Current data of Impact of Brexit on UK living standards............................................................6
Presenting how the policies and theories can be applied and their expected effects...................9
CONCLUSION.....................................................................................12
REFRENCES........................................................................................13

INTRODUCTION
Principles and application of Macroeconomics can be understood to be significantly
essential for strategic analysis, long term implications growth rise and towards shaping effective
living standards within country. Macroeconomics principles deal with economy functions on
large scale, where economic aspects among country which are consumers and firms have
significant correlation with macroeconomic policies in structure. UK has been undergoing
overwhelming change with Brexit implications, on political upfront and policies of Brexit for
partition from Europe. Bexit decisions has caused rippled effect on world economy, noticeably
in Europe where Britain vote has caused uncertainty in world markets.
The report will examine focus towards macroeconomic policies, structural changes in
economic policy, outlining possible positive and negative long term effects of Brexit on
standards of living. Study will determine examination of UK long term political decisions,
strengthening analysis evolving towards policies and theories relevant to Brexit for productive
standards of living in UK. Brexit has fundamentally evolved as one of the most critical and
crucial political decision formally taken, to impart from European union which has impacted
economic structure aspects variedly. Study will be also bringing potential focus towards
determining productive aspects, technical evolved scenarios engaging towards Brexit in UK and
how political structure has been impacted overall. The research will further also analyze
examination on graphs, data and relative information of macroeconomic policies for technical
rise towards Brexit implications diversely. Report will also further in detail develop examination
of policies applications, expected effects and functional economic optimism for strengthened
functional approaches in frame.
Explanation and analyzing policies and theories relevant to Brexit positive and negative effects
on standards of living in UK
Economic policy analysis can be understood as joint program offered by
departments of economic and public policy, where it combines multi-disciplinary approach to
policy analysis for strengthening effective fiscal and monetary implementations. Brexit is one of
the most historical decision in UK political history where policies and theories relevant has
created significant impact on positive, negative horizons among standards of living in UK. Brexit
has huge impact on economic structure and living conditions among people which is relevant for

analysis in detail based upon significant economic arenas (Brexit: What you need to know about
the UK leaving the EU, 2020). Fiscal policy: The analysis on fiscal policies examine government spending, revenue
behavior influencing economic policies diversely based on spending and tax revenue
optimization. Spending of government has been also impacted with Bexit under shape,
where exports in EU territory has been significantly lowered in recent time period.
Practical implementation also enables us to expand focus towards decline in business,
and extended commercial chain networks where functional rise has been reported to be
reduced. Monetary policy: British government has created outlook change, where monetary policy
is based on market operations, discount rates and reserve requirements. With Brexit under
implementation, supply economic capacities has been impacted due to changes with
increase in interest rates among exports within Europe. Monetary policies has
significantly impacted negatively on economy in UK, and downwards revision of
economic supply chain around world. Referendum has worsened economic performance,
policy structure needs and sustained macroeconomic structure. This can be also analyzed
as one of the major factor where businesses are facing downfall, due to policies change
and decline in consumer’s market spending power (Thissen and et.al., 2020).
Theories related to Brexit
There have been varied theories found, which enable us to analyze Brexit impact on UK
living standards within recent time period and to further strengthen up analysis based on goals
operatives functional rise. Varied theories will enable us to examine in detail analysis based on
economic parameters and political context perspectives. Constructivism and Brexit: It adheres focuses towards norms, conventions and rules that
are evolving within international, UK and European politics dynamically based on
significant commercial networks. Constructivism focuses on identities which are formed
and their role within foreign market policy making, where Brexit has been found to be
one of the significant decision in UK history having huge economic implications.
International theory of constructivism has explained reasons for Brexit which has been

focusing on identity, power and legitimacy factors and significant norms which are
highly influential. It can be understood that Brexit procedures constructivism promotes
ending to UK and EU membership aspects, for strengthened functional rise diversely
based on optimum new rules. It also expands focus on fact that political structure
legitimacy, with rise on Brexit has further leveraged competencies rapidly based on new
regulations and optimized efficacy scenarios widely expanding (Simionescu,
Streimikiene and Strielkowski, 2020). Bureaucratic polices and Brexit: Theories of Bureaucratic policies focuses towards
extended outputs and individual policy positioning which is produced within bureaucratic
and institutional states. Brexit has been focusing on politics, debates within business
grounds scenarios, extended functional rise parameters functionally and to shape up new
procedural implications. Brexit has shaped up procedural complexity widely, based on
new functional rise diversely where imparting from EU has changed macroeconomics
functional productivity impact on living standards. The policy change has also lowered
significant working efficacy domains for companies to expand businesses, with
significant impact on economic structures and overall working targets dynamically. Cognitivism and Brexit: Cognitivism approach look more at the mindsets and functional
psychology within individual decision makers where beliefs practically shaping
decisions, are worked on for larger working engagement aspects. UK has taken up
decision to impart form EU, which has come as one of the prime decision for extending
new country based employment levels and also strengthening functional growth factors
imperatively. Perceptions have significantly changed and shaped with cognitivism
approach, where decision makers has politically taken up best priorities for extending
significant rise to impart form EU union (Fuller, 2021)..
Positive effects on UK Standards: The UK has seen positive impact of Brexit with increase in
country regional employment perspectives variedly, and also economic policies are slowly
getting in shape for dynamic business strengths. It has been identified that initially, it was a
tough time for the country because many people become jobless and this in turn cause adverse
impact over the people. However, Brexit lead to promote the innovation and regional work so
that it lead to cause positive impact over the local economy.

Negative effects on UK standards: UK has seen huge negative decline among business
operations, where EU trade has rigorously declined in recent time periods with change in
monetary and fiscal policies functionally. Also, with rise on interest rates and export duties UK
living standards have lowered and its connections with global businesses has also significantly
impacted in recent time period (Bloom and et.al., 2018). In addition to this, due to lower down
the income level of people will decrease the level of standard. This in turn requires immediate
response from policy so that the situation can be controlled. Along with this, the rents and house
price continuously increases that affect the people standard negatively. There is a negative
impact identified over the economy of a country and this in turn also increases the cost of living
that reflected the negative outcomes.
Current data of Impact of Brexit on UK living standards
The Brexit impact on UK, within living standards can be understood to be drastically
wide for analyzing functional growth and development towards shaped up functional
perspectives for enhancing its long term impact. Uk has witnesses significant decline with
Brexit, where with rise on interest rates and fluctuating economic policies the business standards
has been declining for attaining new targets. Studies published in 2018, estimates examine focus
towards economic costs of Brexit where vote to impart form EU has been lowering major
perspectives dynamically (Klimavičiūtė and et.al., 2020).
The referendum has also reduced British national income by 0.6% and 1.3% where data
enable us to analyze that decision has lowered functional operatives significantly. The Britain
exports has also dropped from 19.3% and imports fell 21.6%, which shows the biggest monthly
declines since records began in 1997. Shipments to non-EU countries increased slightly, and
imports from countries outside has also impacted with huge decline in business operational
profits significantly. It can be alsos analyzed that companies are witnessing huge decline, where
retail industry is top among lists which examines the focus towards new functional operatives.
Brexit has signified challenges within inequality in housing market, poverty among living
standards within working people and also impacted consumers spending power dynamically.
The economic fluctuations rise has also reduced operative growth significantly amon recent
years, by Brexit under shape for new entities commercial rise goals rapidly. This can be also
analyzed to be widely one of the significant aspect, where data shows that UK has witnesses

huge changes and complications by voting for Brexit (Fernández, Paz-Saavedra and Coto-
Millán, 2020).
The data shows that from business has declined and impact on economic parameters has
been showing after Brexit to be lowering revenue an profits from year progressively

In accordance with the above chart, it has been analyzed that there is a fluctuation in the
GDP of UK due to Brexit and this in turn cause decrease the living standard of people. It is so
because changing the UK economy lead to increase unemployment rate and decrease wage rate
with cutting down jobs. Therefore, living standard of a people is directly depend upon income of
the people. That is why, these factors shows that leaving EU has lower down the level of
standard of people. Not only this, Brexit affects the trade agreement and negative impact over the
trade which affect the jobs of a people. Hence, it can be stated that due to change in overall
performance of a country, there is a negative impact identified over the living standard of UK
people (Kyriazis and Economou, 2019).
Illustration 1: GDP growth
(Source: Commentary: Monetary and Fiscal Policy Normalisation as Brexit is
Negotiated, 2020)

Presenting how the policies and theories can be applied and their expected effects
Fiscal policy response to interest rate and also hit the economy at negative manner,
however it went reverse in 2010 at the time of Brexit. This reverse is due to buy the government
debt and country like UK which have its own currency and also affected the most due to Brexit.
Therefore, UK has a central bank which buy the government debt which means that government
did not force defaulting. Further, the Brexit also leads to create a negative impact over the
economy of a country as well as living standard of people. That is why, it can be stated that due
to debt, there is a raise in the taxes and this in turn lead to cause opposite impact over the
utilization of a resources (Dhingra, Machin and Overman, 2017). As a result, to control such
situation, there is a need to implement or use fiscal policy in order to monitor the negative
outcomes of Brexit ad boost the demand as well.
However, it has been analysed that Brexit leads to uncertainties and it has also reduced
the household living standards by increasing the cost of living. Such that baseline estimated
entails that the vote led to 1.7% increase in the inflation and which means that the average
household increases by £404 per year. Moreover, it can be stated that due to increase in inflation,
there is a direct impact over the real wage growth and it increases the cost of living standard. As
a result, there is an

From the above graph, it has been also interpreted that income of the people also declines
and there is a wide difference between the people's income and increase in the recession time. In
order to support the same, fiscal policy has used such that government may employe
contractionary fiscal policy by lower down the tax rate to increase the aggregate demand and fuel
economic growth. This in turn also assist to manage the economic growth of a company along
with changes in the living standard of people as well.
On the other side, monetary policy also used by the government in order to respond the
negative outcome of Brexit over the living standard of UK people. As a result, there were 15%
growth identified within a country over the previous respond. Nevertheless, loss of production
within a country allows the central bank to ignore the temporary increase in inflation and also
focus upon t he sustainable output growth. Jucyte, Kumar and Ruan (2021) also examined that
during a time of Brexit, if price are sticky, then inflation lead to distortion within allocation of a
resources, as it changes over the time. The main aim of the policy is to create an easy money
environment that lead to create a long-lasting effect on the economy so that it create a positive
impact over the living standard of the people as well.
Illustration 2: Inflation differences across income deciles due to the Brexit vote
(Source: The Brexit Vote, Inflation and UK living standard, 2020)

In accordance with the Keynesians who believe that consumer demand for goods and
services did not related to cost of capital in order to get the goods. That is why, at different
economic cycle, monetary policy has to an influence over the income of people and economy.
During the time of Brexit, Federal Reserve changes the reserve requirement at banks which lead
to increase or decrease in the money supply. That is why, this reserve ratio has affected the
money supply by regulating the money banks that must hold in reserve.
Thus, it can be stated that Brexit vote causes a negative shock over the UK future
economic performance and this in turn cause negative impact over the real wages, living
standard in UK (Kara, Karimov and Nguyen, 2020). Secondary sources also stated that leaving
EU will leads to reduce the living standard of UK people and have a direct impact over wages.
Brexit lead to unemployment and that is why, most of the people losses their jobs that decreases
the living style due to decrease in wages.
Theories applications and expected effects from them
 The constructivism theory has been significantly applied with principle of rationalism
and structure based differences, where it is utilized to bring on significant interaction
perspectives for larger effective Brexit implications. Its effect can be understood to be
significant where Brexit, political partition form European Union has been massively
impacting international political system development. Furthermore, also with change in
economic parameters it has been found that UK needs to extensively head on towards
stable living standards for further gaining confident rise among company’s business
scenarios.
 The EU and Brexit partition with application of Bureaucratic Brexit under shape
examines focus towards operating new changes within political and economic structure
perspectives significantly upon businesses. It can be also analyzed that effect of this
theory has been found to be functionally crucial for larger working abilities rise, where
economic stabilization has to diversely optimized. This also holds specific keen synergy
for new extensive platforms development, where Brexit has impacted in imports of
businesses and company’s regulations for new standards rise.

 Application of Cognitivism theory application in relation to Brexit explains fact that
people living standards and working perspectives has been also impacted with lowered
abilities for key operational changes. This can be also primitively understood that Brexit
decision has lowered commercial benchmarks growth in relation with international
business platforms diversely for competent professional domains (Cucinelli and et.al,
2020).
CONCLUSION
From the above analyzed aspects within report, it can be concluded that macroeconomic
fluctuations and economic policies changes among UK has profound impact on overall welfare
within commercial scenarios. The report has concluded Brexit as one of the most strategic
decision taken within UK political history, for division and partition from European Union on
basis of economic paradigms. Study has presented economic policies and theories approaches,
for strengthening rise diversely based on implications rising from Brexit within UK and its
impact on living standards. Report concluded analysis of fiscal and monetary policies, and
theories such as cognitivism, Bureaucratic theory and constructivism theory where analysis has
examined Brexit to be huge on operative growth within country. The research has also examined
recent data based on impact of Brexit on living standards within UK, and its functional decline
on leveraged working scenarios around world. Report has also concluded analysis on detail,
where application of theories has been done significantly bringing analysis on focus of overall
impact on economy perspectives. UK has witnessed decline on business grounds an international
competency with high increase in taxes, functional decline in exports and also significant
commercial working scenarios, Brexit has also lowered optimistic positive growth rate by larger
level, where companies and individuals are facing huge losses on economic fronts.