Evaluating Brexit's Impact on the UK Economy and International Firms

This essay examines the multifaceted impact of Brexit on the performance of UK international firms, considering both opportunities and challenges that have emerged following the United Kingdom's departure from the European Union. It discusses how Brexit has provided firms with the freedom to explore new markets and establish independent trade policies, while also highlighting potential drawbacks such as increased business costs through customs and tariffs. The analysis explores the loss of benefits associated with the EU's single market, including the free movement of goods, services, capital, and human resources, and the challenges of forging new trade agreements. Furthermore, the essay delves into the implications of Brexit on competitiveness, business costs, currency exchange rates, agricultural policies, and immigration, ultimately concluding that while the transition presents difficulties, it also offers the potential for long-term economic benefits and a stronger economic standing for the United Kingdom.

ECONOMICS
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Brexit 1
Primarily, Brexit refers to the exit of the United Kingdom from the European Union
trading bloc. The exit is expected to be effective from March 2019.Following the Brexit vote, the
United Kingdom economy has experienced both good and bad changes. Positively, the United
Kingdom operating firms have the freedom to choose newer markets, make own trade deals,
implement their own trade policy which was not available to them under the European Union
which is a good thing because international firms are likely to expand and increase revenue.
However, in the process, United Kingdom international firms have to penetrate newer markets
on their own, encounter additional business charges through customs and tariffs. All in all, the
Brexit vote is changing the revenue and economic growth of the UK’s economy and international
firms.
Noteworthy, European Union member states have enjoyed competitiveness and
penetration of new markets by virtue of their membership (Giles 2017). Following the Brexit,
International firms in the UK might incur additional costs in trading due to the customs and
tariffs that will apply in the case of continuing trade ties with Eu member states and non EU
Member states. This additional business costs might be a burden to some internal firms, costly
and might slow down expansion of these firms into new territory. The European Union offered a
single market for UK’s International firms. The fact that international firms will have to make
new deals with new trading partners might take time, leading to loss of revenue and employment
opportunities thus the assertion that the vote has negative effects on firm performance(Figure 1).
Moreover, under the European Union there’s is free movement of goods, services,
capital and human resource thereby creating a single market. For its member states, there is no
custom barriers unlike for non-European Union states(Cadman & Tetlow,2017).Also, under the
European Union member states are able to enjoy lucrative deals entered into by the union which

Brexit 2
is beneficial for member state economies. After the vote, international firms will have to forge
new trade arrangements with European Union member states and non-member states. The
forging of new deals might slow down the revenue for the firms due to the time consuming
nature of negotiating deals or the discontinuance. The time needed for forging new deals might
cost revenue for the international firms and contribute to layoffs which isn’t good for the
economy, firm or labor force.
Remarkably, the European Union is considered the biggest single market in Europe.
Being the largest single-market in Europe, the Union has promoted business or economic
efficiency. Specifically, the European Union offers fewer paperwork requirements for doing
business within its member states(‘Choosing the right…n.d).Further, the European Union market
has implemented a harmonized technical and safety standards which makes it easier for its
member states to trade thereby boosting trading efficiency between UK’s international trading
firms and their European Union member states trading partnerships. Further, the fact that the
Euro is the main currency for transactions boosts business efficiency owing to the fact that the
Euro is the main currency for most European countries.
The European Union frowns upon anticompetitive behavior thus providing competitive
opportunities and advantages within its member states (European Commission, 2014).Under the
European Union, competitiveness is encouraged thereby making it possible for the International
firm’s belonging to the United Kingdom to trade in products and services which are produced by
other member states. International firms in the United Kingdom, will not be shielded from anti-
competitive practices as they were under the European Union. These international firms will
have to have monopolies, collusive and exclusive dealings among other anti-competitive
challenges without the backing of the Union thus making them vulnerable to collapse and

Brexit 3
reduced revenue to which they were shielded from Under the EU.Anti-competitive conduct
opens up UK firms to new vulnerabilities which might be disastrous for UK firms.
Under the European Union, member states are beneficial of reduced business costs
(Directorate –General for Internal Policies 2016).There is reduced cost of doing business in a
single market owing to the fact that international firms are able to trade freely without the
existence of customs and tariffs. Customs and barriers are considered an addition cost of doing
business as compared to free market. The European Union free market is exclusive to its member
states only. Primarily, Member states of the Union are required to implement their own barrier
and tariff system to non-member states thereby raising the cost of doing business between them
and non-member states. Currently, United Kingdom’s International firms get to enjoy free
movement of goods, services, capital and human capital until the expected exit on the month of
March 2019.
Arguably, the fact that the main currency used in the Union is the Euro, can be a good and a
bad thing based on the circumstances. Owing to the depreciation and appreciation tendencies of
all currencies, the Euro has both negative and positive consequences on economic growth of
international UK’S firms. The Euro has been subjected to various setbacks .Sometimes, the Euro
is considered weak against the dollar and has been blamed for low economic growth rates of
some of the Union member states (Tejvan 2016).International UK firms are likely to enjoy
competitive exchange rates after leaving the Union because they won’t be forced to use the Euro
as an exchange media thus the likelihood of increased revenue for the international firms through
the use of other currencies.
In addition, the decline in growth of the agriculture industry has been considered to be the
ineffective policy directives issued by the union to its member’s. Following the exit vote,

Brexit 4
Agricultural based international firms might be subjected to newer and effective policies thus
boosting their revenue and creating new employment opportunities for its citizens. After the
vote, the UK will have the mandate to make its own agricultural policies which will be specific
to the country’s conditions thereby creating the likelihood of increased yields, profits and more
employment opportunities. Also, another ineffective policy is the immigration laws governing
the Union. Owing to the free movement of human capital among the member states has created
an overcrowding and unemployment challenges in the United Kingdom.
However, following the Brexit vote, the percentage of immigrants has reduced thus
reducing the rate of unemployment and overcrowding in the UK (Figure 2).Additionally, under
the European Union, member states are required to financially contribute to the European Union
budget through membership fees and other financial obligations. The UK economy is likely to
improve owing to the fact that the EU contribution fee will be allocated to something else which
is a good thing. Owing to the fact that the European Union dictates most of the economic
policies, fiscal and monetary policies among other regulatory measures as to the conduct of
business, International firms in the United Kingdom continue to operate under these policies
however ineffective they may be until the finalization of the exit from the Union.
Following the final transition from the European Union, international firms in the UK can
implement their own policies departing from the European Union (The week
2017).Conclusively, it can be said that the Brexit vote has created opportunities and challenges
for the performance of international UK firms. From an analysis, the negative effects of the vote
on the UK international firm performance is not a death sentence and can be remedied with time
thus making the vote a good move in the long –run for international UK firms.

Brexit 5
Predominantly, wealth sharing is encouraged among the European Union which might
not be considered fair and curtail the economic growth of richer countries(Future working
2015).The fact that richer member states are expected to uplift the economic standing of poorer
countries. The fact that there is sharing of wealth between member states of different economic
standing between countries creates different effects. Poorer countries are likely to benefit more at
the expense of developed countries. The European Union seeks to uplift the economic and
developmental standing of poor countries. The growth of richer economies may be curtailed by
the fact that richer countries contribution to the member states are greater as compared to the
contribution and participation of the poorer member states. The European Union policies might
be restrictive for the growth of European countries that might be global economic leaders in the
event that they have the freedom to chart their own fiscal, monetary and other macroeconomic
factors for their economic prosperity (Musaddique 2017).
Arguably, Brexit could prove beneficial or otherwise to the United Kingdom’s international
firm’s performance and economy (Van 2017).Particularly, following the Brexit announcement,
the value of the pound went down thus proving the assertion that the Brexit vote does have an
adverse impact on the performance of the United Kingdom international firms and economy.
Following the Brexit, the United Kingdom is losing access to the free single market it enjoyed
under its membership in the Union. This means that the United Kingdom will have to enter
bilateral or multi-lateral trade agreements to trade with the European Union member states .The
United Kingdom will subscribe to custom barriers and tariffs as a non-member state of the
European Union (The week 2017).After the Brexit, United Kingdom international firms will no
longer enjoy the custom benefits under the European Union because it will be treated as a non-
member of the Union. International firms in Britain will incur additional costs such as tariffs in

Brexit 6
order to trade with the Union member states. Also, the United Kingdom is likely to encounter a
reduction in the living standards (Giles 2017).
Further, the likelihood of a decline in economic growth for the United Kingdom is highly
likely due to the transitioning changes the country has to go through(Amadeo 2018).The
devaluation of the pound following the Brexit vote has lowered the economic growth rate for the
country though the same is in recovery. Owing to the exit, the importations costs from European
Union member states will reduce revenue for the country .In addition, the UK loses access to the
technological advances available in the European Union market. However, Following Brexit,
The UK is able to make its own trade policy (Fox 2017).This freedom to make own trade policy
might address the country’s unique problems thereby leading to better economic performance. In
addition, the United Kingdom, has the capacity to forge its own trade deals and agreements
(Davis 2017).In a twisted way the Brexit vote has created a significant drop in the number of
immigrants into the country.
Figure:1 (Edwards 2016)
Prior to the vote, The United Kingdom has a huge percentage of immigrants which lead to
increase of unemployment levels in the country. In addition, following the Brexit announcement,
the United Kingdom will have the freedom to introduce and implement its own taxation system

Brexit 7
which is a way forward from the European Union where such matters were decided by the Union
(Amadeo 2018).
Figure 2
Source: ( Bruce 2018)
CONCLUSION
All in all, the United Kingdom had its share of benefits from its membership of the
European Union, from free access to the largest single market in Europe to encountering no
custom tariffs. However, following the Brexit vote, International firms in the UK have to forge
new trade relations on their own, implement new trade policy and incur addition business
costs .Overall, the Brexit move might steer the United Kingdom into a stronger economic
standing despite the challenges.

Brexit 8
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