Brexit's Impact on Trade: Economic Models and Business Strategies

This report examines the multifaceted implications of Brexit on trade, focusing on the economic models and business strategies employed in response to the UK's departure from the European Union. It begins with an introduction to Brexit and its political and economic context, followed by a discussion of trade integration theories and the impact on the UK economy. The report analyzes statistical data, trade agreements, and the strategies of companies like EasyJet in navigating the post-Brexit landscape. It identifies potential economic models for the UK-EU relationship, considering factors such as control of laws, customs arrangements, and contributions to the EU budget. Furthermore, it explores the theoretical opportunities and threats posed by Brexit, including currency devaluation, trade tariffs, and market access limitations. The report concludes by evaluating strategies to exploit opportunities and mitigate threats, considering factors like sovereignty, terrorism reduction, market dynamics, and job losses, and the UK's global position. The analysis incorporates various sources and references to provide a comprehensive overview of the topic.

Running head: TRADE IN BREXIT
Trade in Brexit
Name of the Student
Name of the University
Author Note

1TRADE IN BREXIT
Introduction
Brexit means a situation when the United Kingdom decided to come out of the European
Union. This has caused many troubles in the political as well as the environment issues in that
region. There was referendum, which was conducted and in the weeks following, where the
media have largely focused on short-term, immediate and pressing issues, both economic and
political. There was negotiation between the UK and European Union based on which the
decision to exit and there was an impact of brexit on the economy, the markets, and indeed on
the financial conditions of the region.
Theory behind the trade integration
After the referendum which took place in UK, the people of United Kingdom decided to
exit the membership of European Union. This has caused a major impact on the political and the
social environment of the Country. During Brexit, Britain has entered into trade agreement. A
decision is taken whether UK will be leaving the European Union.
After the globalization and liberalization which bought about a change in all over the
World. The European Union being is one of the most attractive places for trade. After Brexit, the
UK will face problems regarding the business operations. The UK needs to negotiate the trade
and agreement with the other Countries. The financial institutes are also affected by the Brexit
and it was discussed in the referendum (Baker, Ali & Thrasher,2016).The decision where the EU
can save the UK government from having to contribute every year. There has been an issue
where there is a prediction that the UK’s contribution to the EU comes in the coming years.

2TRADE IN BREXIT
Topic: Statistical data after Brexit
Source: (Alhajji, 2017).
The decision of UK to come out of European Union after the referendum which took
place and the International companies have started their process for Brexit and there was a
potential increase in the cost associated with the UK- EU trade. There was an increase in the
price of goods, services after the Brexit. The considerations and changes include the locations;
trade barriers and the supply chain management and trade between third Countries outside the
UK.The impact was felt by wider a person that operates in the EU (Duff, 2017).

3TRADE IN BREXIT
Trade with a UK and EU company, and the strategy & Trade Principle
Taking an example of a non EU based Company Easy Jet and a UK based Country
Switzerland. After the potential decision of exit of UK from the membership of EU, the
important factor that affected was trade or business in between the Countries. The airline
industry was hugely affected by the decision. Trade and commerce is most crucial for the growth
and prosperity of the Country. There has been a problem to negotiate the trade deals after brexit.
There has been huge loss of Easy Jet. Even though after Brexit, Easy Jet had decided to maintain
the trade and business relations in the Countries and keeping its headquarters in UK.
The strategies and trade principle used are:
1. Firstly, the strategy was to join the ETFA. The UK will be allowed to access the EU
market for negotiating the deals with the non EU member Countries.
2. Secondly, the strategy is to follow a Swiss style approach to an EU relationship is
followed. The Country has to use bilateral treaties in the relationship with the EU so that
they are able to negotiate the trade. This will help the UK to negotiate specific agreement
after maintaining some of the EU laws. Those who were in favor of exiting EU
membership believed that the UK is well placed to negotiate a favorable trade
arrangement with the EU even after post-Brexit.
3. Thirdly, the strategy is to follow the rules of World Trade Organization. This strategy
may be a nuclear option and only few of the airline industry will follow.
4. Lastly, like other European airlines, Easy Jet will regularly engage with the UK and the
EU on a wide range of issues which includes the impact of Brexit on aviation industry

4TRADE IN BREXIT
Identify possible models of economic relations between the UK and EU-27 after the Brexit
The UK Government which has now been publicly set out so that their aim for the Brexit
negotiations is for the UK’s future relations with the EU since it has been left out. At a high
level, the UK aims to be global in all its endeavors and they cooperate with their EU neighbors.
The areas which were to determine after the Brexit was as follows:
1. Take the control of the laws: After the Brexit the UK decided to leave the European
Union and they decided to manage with the Court.
2. A new custom arrangement: In order to prioritize the trade between the goods and the
services this includes the financial services between UK and the EU (Featherstone, 2016).
3. Brexit did not contribute to the EU Budget: After Brexit there has been many issues
raised and therefore there is no appropriate contribution.
The European Union established a draft negotiating the goals and setting out what the
negotiations are all about which would move to the future relationship with the EU.
The areas which will determine the UK EU model
The four various things on which the new model will be determined .The company will
depend on following:
 People,
 Capital
 Goods
 Services

5TRADE IN BREXIT
The United Kingdom indicated a Non EU member without the obligation of the member
state. The agreement was based on and aimed for ambitious free trade and which was concluded
after Brexit (Gordon, 2016). Lisbon Treaty (Article 50) provides for exit of member countries
from European Union. For any country to come out of European Union, it has to negotiate a deal
with EU. The deal will provide for a settlement between EU and UK. The most important focus
was on the relation of UK with the members of European Union.
After the globalization there began a free trade movement of capital, goods and services
which helps in the belief that the market forces are unleashed and unstoppable. After this the
members of the Country saw that they move towards untrammeled freedom towards a positive
light. This was a protest against the career opportunities and there has been an economic model
that has been taking place. There was control which was imposed so that there will be free
movement of the capital and people and trade unions could have bargained for the higher pay or
settle down for cheap labor which was being brought into the Country (Hellwig,2017).
The theoretical opportunities and threats posed by Brexit on Easy Jet which they faced in
different scenarios.
The opportunities and threats posed due to Brexit
 There will be devaluation of pound sterling and it will be volatile therefore it might affect
the sale of tickets of Easy Jet
 There will be introduction of customs and tariffs between UK and EU countries thus it
might affect the number of passenger boarding the flight

6TRADE IN BREXIT
 There will an increase in the trade tariffs in the airlines of non EU when negotiating with
the UK
 Limitation for higher cost for companies with the UK based companies (Torjesen, 2017).
 Easy Jet dealing with UK needs to deal with the trade tariffs and regulation so that there
is no impact in the prices of their ticket
Strategy which could exploit potential opportunities and avert threats
The strength is as follows:
 Sovereignty: The UK does not have full control over the affairs. The UK has given the
control over the decisions to the borders in exchange of the decision related to trade and
security (Joshi, 2016).
 Reduction of terrorism: With the threats increasing the UK believe that the members of
the EU have posed threats and security threats. Thus it will reduce their ability to control
borders.
 On the positive note, Brexit has driven away fears of a US Fed rate hike which could lead
to lower commodity prices and overall impact in the airline industry.
The threats are as follows:
There will be shrinking in the UK market: The UK is a part of the single market with no tariffs
and imports. As the EU countries go to the UK, they will stick towards the rules and the
regulations (McDougall, 2016).

7TRADE IN BREXIT
 Loss of jobs: After the Brexit there will be huge loss of jobs which have been highlighted
as there has been loss of jobs. There has been trade between the UK and the EU
members.
 UK’s place in the World: After Brexit since UK has been a part of EU; it has more
influence on Europe which has many benefits for the UK movements.
 Most of the British legal migrants were coming from EU. There is this feeling which had
at negative impact on UK born workers. Adding credence to local fears was the fact that
since 1997, 3/4th of jobs created are taken up by EU immigrants this has a impact on the
airlines.
 The immediate impact of Brexit is that there is a risk of aversion when it comes to
investing, especially in light of possibility of other countries following suit. This will
affect the FPI outflows from foreign portfolio investors.

8TRADE IN BREXIT
References
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world is imagined outside the UK. British Journal of Politics and International
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(OGEL), 15(2).
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therapy: the need for continued pan-European collaboration.
Duff, A. (2017). Brexit: the launch of Article 50. EPC Discussion Paper, 9 February 2017.
Dhingra, S., Ottaviano, G., Sampson, T., & Van Reenen, J. (2016). The impact of Brexit on
foreign investment in the UK. BREXIT 2016, 24.
Dorling, D. (2016). Brexit: the decision of a divided country.
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Review, 14(2), 252-268.
Joshi, V. N. (2016). Brexit: Implications for India?.

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McDougall, D. (2016). Australia and Brexit: déjà vu all over again?. The Round Table, 105(5),
557-572.
Murray, C. (2017). Deemed leave: A concrete plan to secure EU residents’ rights post-Brexit.
Torjesen, I. (2017). Four in 10 European doctors may leave UK after Brexit vote, BMA survey
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