Analyzing the Challenges and Consequences of Brexit for the UK

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BREXIT
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Contents
INTRODUCTION............................................................................................................................. 3
HISTORY ABOUT EUROPEAN UNION..........................................................................................4
CHALLENGES FACED BY THE UNITED KINGDOM AS A MEMBER OF EUROPEAN UNION............5
MEANING OF BREXIT................................................................................................................. 7
IMPLICATIONS OF BREXIT ON THE ECONOMY OF THE UNITED KINGDOM................................7
CONCLUSION................................................................................................................................. 9
REFERENCES.................................................................................................................................10
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INTRODUCTION
The United Kingdom was called for a plebiscite on June 23rd 2016 to decide between the
staying or leaving of the United Kingdom from the EU and this was carried out through a
systematized procedure known as the Brexit (Clarke et al., 2017). The result accounted were
52% to leave and 48% to stay, therefore, leave won from leading votes and so now presently
Britain does preparation for leaving on March 29th 2019 because there was too much debate
about the undetermined deals, the consequences of the politics and the implication of the
economic factor.
This report would lay down the explanation of the European Union along with its
history, further the report is going to discuss about the challenges faced by the United Kingdom
as a part of the EU and might persuade the people to vote for leave and then Brexit and its
implications on the economy of the country (Hobolt, 2016). This report would lay an
understanding of the implications that Brexit has on the economy of the United Kingdom.
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HISTORY ABOUT EU
The European Union generally recognized as EU is a partnership between the economic
and political aspect which came into action just after the Second World War with an idea to
make sure that the future peace is maintained, growth of the economy, robust ties and
collaboration between the European countries (Colantone and Stanig, 2018). This all started in
the year 1951 with “The European Coal & Steel Community” developed because of the Treaty
of Paris. There were various countries like Italy, the Netherlands, Italy, Luxembourg and
Belgium that agreed upon with France for repudiating their part of sovereignty for keeping their
coal and steel in the same market place.
In the year, 1958 the countries that are listed above made a decision to move the things
further and eventually signed the Treaty of Rome that allowed the member countries to
manoeuvre the goods, services, capitals, manpower, unions between the founding states as a
result forming the European Economic Community (Becker et al., 2017). Immediately, the rest
of the countries were willing to be a part of this but the contemporary members had to give an
application to the already existing members to give a decision for them to let in or not.
The France president that is Charles de Gaulle turned down the application of the
United Kingdom in 1963 and 1967. Then further in 1973, EEC expanded itself and introduced
three more members under them which were United Kingdom, Ireland and (Denmark and
Salter, 2016).In Maastricht, the European Treaty was signed in 1993 that made the European
Union established under its present name which helped in bringing cooperation among the
governments, the economic plans and also helped in preparing the initiation.
In the present times, the European Union has enlarged itself to include 28 members that
account for a total population of 500 million citizens and more and also validated end number
of laws and reforms (Kierzenkowski et al., 2016).
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CHALLENGES FACED BY THE UK AS A MEMBER OF EU
 IMMIGRATION
The residents of the European Union countries, involving the United Kingdom have the
lawful right to work, travel and live in the countries of EU as a part of the free movement is
considered to be among the four principles of foundation of the European Union (Dhingra et al.,
2016). The campaigners stated that the immigration of the European Union has a positive
implication on the economy of the country, claiming that the growth predictions of the country
are partially on the basis of increased levels of the net immigration.
Then the other aspect is the non-free movement ended up making harder for the British
in terms of travelling, studying, living and working around the other European countries
because for that they may need a visa. According to Archick (2016), the left of the EU would
allow the residents to make choice about their immigration policies which is true but on the
other hand, it is not going to cease the immigration (Dorling, 2016). With this intention, the
number of immigrants in the United Kingdom can be reduced related to the leaving of the EU.
But this would majorly be dependent on the deal between the United Kingdom and the EU.
 ECONOMY
The economy along with the jobs that were or lost or gained by the way of withdrawal is
considered to be an authoritative issue also it was warned by the outline of BBC that it is
difficult to find the exact figures (Koch, 2016). The economic outlook for the United Kingdom if
it left the European Union is considered to be negative. The recent inflation report of 2016
stated that the vote regarding leaving the European Union might lead to recession. And this
would also have an effect on the GDP by 2030 which would trigger to deregulation.
Also, it has been noted that if the United Kingdom exits the EU then there would be loss
of some jobs as there are 3.3 million jobs in link with the European Union through exports
(Sampson, 2017). According to the reports of Confederation of the British Industry, the job
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losses in the United Kingdom would be around 350,000 to 600,000 by 2030 if it made the
decision of leaving the EU.
 THE COST AND DISBURSEMENT
The United Kingdom has to contribute towards the budget of the European Union as it is a
part of it and also obtains money in the ways of receipts and funds. Also, there are various
countries that are considered as net contributors and net inheritors (Booth et al., 2015). The
United Kingdom is considered among the third largest or the fourth largest contributor in terms
of the European Union budget in the past few years.
There was argument on the vote for leaving the European Union that resulted in an instant
way of saving the cost, and expressed that the United Kingdom disburses approximately £320
million in a week to stay a part of the EU and therefore, the money generated from there can
be used in spending on improving the National Health Service (Chalmers et al., 2019). However,
the statistics revealed is criticized and is considered to be misleading which lowers down the
trust in the official generated statics as it does not considers that rebate that is applied prior to
the contribution made by Britain in the European Union and this money is utilized in the United
Kingdom only (McCormick, 2017).
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MEANING OF BREXIT
Brexit is abbreviated for them of “British Exit” which mainly refers to the decision of the United
Kingdom in a plebiscite to exit the European (Union Irwin, 2015). The result that was obtained
out of the referendum disregarded the expectations and clarified the global markets; as a result
making the British pound fell to in comparison with the dollar from the last 30 years.
IMPLICATIONS OF BREXIT ON THE ECONOMY OF THE UNITED KINGDOM
 TRADE POLICY
Under some models of Brexit, the country would be allowed to formulate its trade policies
and priorities but these are considered to be not of much difference from the EU (Cini et al.,
2016). For the vital economies, the United Kingdom would be considered of less leverage and
lesser priority trade partner in comparison with the European Union.
The European Union has a considerate amount of experience in negotiating over all the
aspects of the trade agreements (Clarke et al., 2017). It is presently in the negotiation of the
trade deals with various places like United States, Canada, Japan, etc. that would assist it in
enhancing its access over these markets.
The United Kingdom would obtain flexibility in terms of the negotiation with the trade deals
and specifically by the agricultural protectionism (Archick, 2016). The United Kingdom would
obtain leverage when intending towards the irritants. This is specifically vital for the services
where regulatory barriers are regularly needed for resolving and obtaining significant entry into
the market.
 INTERNATIONAL INFLUENCE
The United Kingdom presently enjoys a considerate amount of effect in and throughout the
European Union which could be reduced if it exits from the EU (Dhingra et al., 2016). But it can
be said that there are various risks on the United Kingdom's influence if it plans to remain inside
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the European Union. This is evident because of the change of staff members in the major
institutions long with the Eurozone risks that are prevailed against the United Kingdom.
The United Kingdom’s mainly comes from the veto power that it gets, in the decreasing
number of the areas of policies and having the power to vote in the Council as well as the
Parliament of the European (Colantone and Stanig, 2018). The minor influence is derived from
the Commission by forming an association with the different states. The United Kingdom has
shaped the agenda in such a way that it has merely been solitary and is believed to be
influential by many companies.
 FOREIGN DIRECT INVESTMENT (FDI)
The United Kingdom is considered to be the largest beneficiary of the FDI among the EU.
Brexit can play a part in reducing captivation of the United Kingdom as access to Europe which
may lead to decrease in the investment from the remaining part of the European Union which
in end acts as the biggest source of the Foreign Direct Investment (Hobolt, 2016).
Earlier in the year 2013, the European Union was considered to be the major source of FDI
in the United Kingdom which accounted to be 46% but this percentage has decreased over the
years. The United Kingdom would remain unaffected due to Brexit because it has various
advantages like language, capital markets, light regulation, etc. (Dorling, 2016). Even after these
advantages, the United Kingdom would have to struggle for the newer investments under
Brexit.
A British company raised a poll which suggested that the influence of Brexit would lead in
not only harming the Foreign Direct Investment but also the investment that the companies of
the United Kingdom aim at wherein it is said that it would have more of negative implication
than that of positive implication (Becker et al., 2017).
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CONCLUSION
It can be concluded that the decision taken by the United Kingdom to exit from the EU
will take into consideration many changes regarding the political, economic and social factors
for years to come in the near future (Sampson, 2017). After analyzing the overall scenario of the
Brexit it can be inferred that the effects of Brexit will have an impact on the working of the
United Kingdom along with having its impact on the people.
Brexit has quite a few negative impacts when associated with the residents of the EU
wherein the United Kingdom might face huge losses in terms of the jobs, then the rights of
living, working and studying in other countries of the European Union member state, or the
freely moving of the goods and services in the European single Market (McCormick, 2017).
Brexit is a reality that is happening to the United Kingdom. But if it is critically analyzed
then it can be inferred that the changes in the long term for the United Kingdom are good while
taking into consideration amicable relations with the European Union member nations allowing
them to conduct a fair trade among them (Cini et al., 2016). Brexit can be beneficial for the
United in the long term in terms of the industrial policies or language or capital markets, etc.
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REFERENCES
Archick, K., 2016. The European Union: current challenges and prospects.
Becker, S.O., Fetzer, T. and Novy, D., 2017. Who voted for Brexit? A comprehensive district-level
analysis. Economic Policy, 32(92), pp.601-650.
Booth, S., Howarth, C., Ruparel, R. and Swidlicki, P., 2015. What If...?: The Consequences,
Challenges & Opportunities Facing Britain Outside EU.
Chalmers, D., Davies, G. and Monti, G., 2019. European union law. Cambridge university press.
Cini, M. and Borragán, N.P.S. eds., 2016. European union politics. Oxford University Press.
Clarke, H.D., Goodwin, M.J., Goodwin, M. and Whiteley, P., 2017. Brexit. Cambridge University
Press.
Colantone, I. and Stanig, P., 2018. Global competition and Brexit. American political science
review, 112(2), pp.201-218.
Dhingra, S., Ottaviano, G.I., Sampson, T. and Reenen, J.V., 2016. The consequences of Brexit for
UK trade and living standards.
Dorling, D., 2016. Brexit: the decision of a divided country.
Hobolt, S.B., 2016. The Brexit vote: a divided nation, a divided continent. Journal of European
Public Policy, 23(9), pp.1259-1277.
Irwin, G., 2015. BREXIT: the impact on the UK and the EU Online available at
(https://www.global-counsel.co.uk/sites/default/files/special reports/downloads/Global
%20Counsel_Impact_of_Brexit.pdf) [accessed on 5th September 2019]
Kierzenkowski, R., Pain, N., Rusticelli, E. and Zwart, S., 2016. The economic consequences of
Brexit.
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Koch, T., 2016. Before a potential Brexit: European immigration to the United Kingdom, its
relative benefits and politico-economic implications (Doctoral dissertation, PhD thesis,
Johannes Gutenberg University, Mainz).
McCormick, J., 2017. Understanding the European Union: a concise introduction. Palgrave.
Menon, A. and Salter, J.P., 2016. Brexit: initial reflections. International Affairs, 92(6), pp.1297-
1318.
Sampson, T., 2017. Brexit: the economics of international disintegration. Journal of Economic
Perspectives, 31(4), pp.163-84.
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