Brexit's Economic Impact on the UK: A Comprehensive Analysis

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INTRODUCTION
This assignment is prepared to assess the impact of Brexit on the economy of the UK. It has
also assessed the challenges UK is facing being a member of the EU. This is with the use of
data and statistics available from different sources. The Brief History of the EU is also
covered along with the timeline. This assignment also covers the analysis of policies of the
UK as a member of the EU and the changes made afterwards and their impact on the other
member countries.

HISTORY OF EUROPEAN UNION
European Union (EU) is a Geopolitical organization which awes a big portion of the European
continent. Several treaties are made for expansion for its expansion which starts from 6 members
state and now European Union consists of 28 member states and is binding with obligations for
the same, for all the member states of European Member it is mandatory to follow the laws and
all are based at Europe. it is situated in an area about 4,475,757 km2 and probable population of
513 million. European Union mange to improve in a single market where there is a free
movement of goods and services internally by following all the laws and policies of trade (Cram
et al., 2016).
ORIGIN OF THE EU
Origin of European Union is because of the various constituents, EU came into force because of
the treaty of Maastricht in 1992 with three other organizations one for specific sectors and other
two for intergovernmental cooperation like foreign and security policy also for justice and home
affairs, and therefore it is called as three pillars of EU. Originally EU is not founded by its
member stated but there are some policies in European communities, this policies form a body a
supranational organization which is designed by optional transfer of some sovereign powers of
the member states. All members’ states decided they will not leave their power but will work
collectively at a big level with the institution. Later on, in 1951, there is an establishment of
ECSC and 1957 the EEC and EAEC. All the committees and institutions having a treaty with the
EU are advised to work under the power of the EU (Chalmers et al., 2019).
DEVELOPMENT AND GROWTH OF THE EU
Development is seen in the European Union as the motive behind the formation of this union is
to maintain peace and unity by following all the laws so that all business and trade is done
legally. EU wants development, wellbeing and growth of all the nations associate with him.
Operations of business should be easy and fair without internal borders for doing business with
companies. EU is trying to maintain sustainable development for stable prices and economic
growth of the country keeping in mind environmental protection laws for the manufacturing of
goods. Also, some policy is made by the EU for protection of workers to give a theory of

equality amongst all and to prevent their minority rights. It is good that the EU welcomes and
respects the language and culture of other countries which is a step ahead for development(Cram
et al.,2016). EU follows all international laws related to trade and respect the bond of the United
Nations. According to EU resources which are used in trade comes from all other nation are
important and should get respect and use properly also EU follow principles of Human Rights
they respect and care laws related to a human who is workers it creates peace overall (Douglas
2018).
CURRENT MEMBERSHIP OF THE EU
28 member states constitute EU, there is an international treaty between all member states of EU
and work under the obligation of membership, there is an exchange of laws between all the
members of European Union, all member state accept the foreign and defence policies related to
trade. All the social and political issues are deal effectively and solution to conflicts is on
immediate basis. Last Croatia joined the EU in 2013 and Mayotte incorporated in EU in 2014.

CHALLENGES FACING UK AS MEMBER OF EU
The United Kingdom left the European Union and that overall process is known as Brexit,
Majority of people voted for the UK to leave the European Union as Prime Minister having some
issues related to the referendum. During all this process the UK faced some challenges. The
challenges faced by the UK after leaving EU are illustrated below but the other members of
EU have also faced the problem due to Brexit as the changes in trade, defence and foreign
policy have affected the interest of other nations.
 UK is the contribution in the EU budget and it is up to € 13 billion, as per the policy,
every year the UK get a rebate in of approx. €4 billion so the estimated budget that the
UK has about € 9 billion. Budget for every year is not the same it is decided at the end of
every year.
 During some last year’s growth of immigration is increased and this majorly started after
Second World War. Immigration is defined as the people of a non-European country to
create their residence in the EU. As per the data of IOM 146,287 people arrived in
Europe.
 According to UNHCR data given by them every year approx. 121,837 refugees are there.
Process of claim of asylum in the UK is a long process many migrants who wants to get
asylum cross the channel from France to the UK, asylum seekers were asked to present
themselves in front of authorities and had to tell the reason for the same and they had
provided house by government and they get financial help from government. Migrant in
class claim for asylum in France as they need protection there life is not so good in
France , they are hoping for asylum from UK(Peers et al.,2015).

Political relationship: earlier UK has maintained diplomatic relations with the
international organizations like NATO, WTO as a member of the EU. It has maintained
foreign affairs, defence and security policies accordingly. But now, it has to formulate
foreign policies again. Earlier it enjoyed the safeguard of NATO but after Brexit, it will no
longer be enjoying the advantage of its protection. The UK also has protection for its people
and territory from EDA. It has to negotiate for the extended protection from the EU now.
Some small countries used to import services from the UK without having any separate
trade relationship with it but now they need to establish a separate trade relationship with
it Holger et al., 2017).
Travelling in EU: after the Brexit the, the traveller has to follow more norms of the
Government of the UK. The norms are for driving international driving permission will be
needed and in case of driving someone else vehicle, a green card and GB sticker is needed.
Though, flights, ferries, bus and coach services etc. will be free from any new regulation.
For the air, travel passport needs to be renewed and the European Health insurance card
(EHIC) will not be legal. The reason is EHIC is part of EU-UK terms and they are not part of
renewed trade policy of the EU.
The threat to Union: England and wales supported leaving EU by 53.4% and 52.5%
respectively. Northern Ireland and Scotland supported the idea of staying in the Union 62%
and 55.8% respectively. So, the decision to leave the EU has created challenges for the unity
of the UK. It also impacts the diplomatic relationship between the countries (Benjamin et
al., 2018).

IMPACT OF BREXIT ON THE UK ECONOMY
The withdrawal of the UK from the EU has affected the economy of the UK in multiple ways
and these are as follows:
Currency devaluation: the impact of the decline in the value of pound sterling by
approximately 10% made the imports expensive and exports will be affected by the tariffs.
As the data indicates one-third of UK exports to the EU are tariff-free, 1/4th would be
affected by the trade barriers and other exports would be the risk of high tariff ranging
from 1-10%. Though the tariff would be cheaper the risk of trade barriers and tariff would
reduce the profit margin substantially. The imports become costly and it has reduced the
competitive advantage they gain. The import will also face many tariffs on imports and also
non-tariff barriers to imports. It will also affect the ease of doing business in the UK (Chris
Morris, 2019).
Article 50: article 50 of the EU has facilitated the Brexit and withdrawing membership of
the EU means a division of the financial assets among the EU and Britain. This is the sum
that the UK invested in the EU as a part of its membership. The complete financial
settlement will take place in 2019. The amount of settlement is £5 billion. EU and the UK
have also agreed not linking trade and financial settlement. This is not binding until the
parliament approves it Holger et al., 2017).

New trade relationship: earlier UK has access to a huge trade market due to its PA with
both EU and non-EU member. But now it has to establish trade relations with the other
counties and also enter into a trade agreement with the other nations.
GDP: the Gross domestic products have decreased by 2% or more as the UK is a service-
based economy and they account for 80%. Earlier, the UK has enjoyed the preferential
access to the EU economic union and had large consumer base the EU market alone. Now,
in the absence of PA, it has lost a competitive advantage over other service economies of
the EU. It will also affect the profit margin of service industries in the EU (Holger et al.,
2017).
Reduction in the size of trade market: UK being as a part of EU has a trade relationship
with other EU members along with some non-EU members like Canada, Singapore, and
South Korea etc. but it will no longer be able to have access to this market.
Inflation: the inflation rate is increased due to the increase in the price of a food item and
other imports. It will hurt the economy of the UK. The high inflation rate has also affected
the progress of real wages. Household income level and purchasing power have also
reduced substantially. CPI affects real wage and inflationary pressure are increasing the
growth in other EU areas (Benjamin et al., 2018).

Citizenship: the citizen of Britain has the right to live in other EU countries but now they
cannot live freely in other EU countries. The rights to the citizen of the EU have authorized
them to open a new business and perform business activities at any place in the EU but
they will no longer enjoy the same rights.
Ability to make laws: earlier the UK has stipulated laws by the parliament of the UK. For
withdrawing its membership from the EU, it has to formulate laws for the same and these
laws also need the authorization of the EU. This will put regulation of UK for the legislation
and it will also affect the domain or the subjects in which the EU can make laws and the UK
can do the same. Some topics like travelling in the UK are regulated by different norms for
example: after the Brexit, the traveller has to follow more norms of the Government of the
UK Chris Morris, 2019).
Britain’s status in the world: UK is the fifth-largest economy of the world and UK being as
a part of EU has a trade relationship with other EU members along with some non-EU
members like Canada, Singapore, and South Korea etc. but it will no longer be able to have
access to this market. This facility will no longer be available and can reduce the size of the
economy.
These all are the factors that are affecting the economy of the UK. The impact can be
reduced by taking effective measures on the economy of the UK. (Chris Morris, 2019).

Conclusion
This assignment has concluded the impact of Brexit on the economy of the UK. It has also
assessed the challenges UK is facing being a member of the EU. For this data from the
authentic sources are accessed and analyzed.

REFERENCE
1. Gov.UK, 2019. Visit Europe after Brexit (Online available at
https://www.gov.uk/visit-europe-brexit last accessed on 7 September 2019).
2. ABTA, 2019. Brexit: advice for travellers (Online available at
https://www.abta.com/tips-and-advice/brexit-advice-for-travellers last accessed
on 7 September 2019).
3. Benjamin Martill and Monika Sus, 2019. Impact of Brexit (Online available at
http://www.lse.ac.uk/ideas/Assets/Documents/Dahrendorf/Dahrendorf-Martill-
Sus-BJPIR.pdf last accessed on 7 September 2019).
4. Chris Morris, 2019. Brexit: What is the 'no deal' WTO option? (Online available at
https://www.bbc.com/news/uk-45112872 last accessed on 7 September 2019).
5. Holger Breinlich, Elsa Leromain, Dennis Novy and Thomas Sampson, 2019. Brexit
impact on the economy (Online available at
http://cep.lse.ac.uk/pubs/download/brexit11.pdf 7 September 2019 last accessed
on 7 September 2019).
6. Institute for Government, 2019. EU Withdrawal Act (Online available at
https://www.instituteforgovernment.org.uk/explainers/eu-withdrawal-act last
accessed on 7 September 2019).
7. Douglas-Scott, S., 2018. EU Human Rights Law and History: A Tale of 3
Narratives. Forthcoming in History and International Law: An Intertwined Relationship
Eds Annalisa Ciampi and Gilad Ben-Nun (Edward Elgar 2019).
8. Chalmers, D., Davies, G. and Monti, G., 2019. European union law. Cambridge
university press.
9. Cram, L., Dinan, D. and Nugent, N. eds., 2016. Developments in the European Union.
Macmillan International Higher Education.
10. Peers, S., Moreno-Lax, V., Garlick, M. and Guild, E. eds., 2015. EU Immigration and
Asylum Law (Text and Commentary):: Volume 3: EU Asylum Law. Hotei Publishing.
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