ECO 4012: Assessing the Impact of BREXIT on UK Living Standards

This essay critically analyzes the significance of BREXIT for the British people, examining its multifaceted impacts on various sectors of the UK economy. It delves into the factors leading to the BREXIT vote, including concerns about immigration, sovereignty, and monetary issues. The analysis covers the effects of BREXIT on the British pound, the automotive industry, supply chains, and the financial services sector. It also evaluates the potential impact on UK-EU trade relations, highlighting the economic consensus that leaving the EU would negatively affect the UK's short- and long-term economy. Furthermore, the essay discusses the benefits and drawbacks of BREXIT, particularly focusing on the UK's ability to create its own trade agreements and regulations. The document concludes by emphasizing the complexities and uncertainties surrounding BREXIT and its long-term implications for the UK.

Macroeconomic project

Contents
INTRODUCTION.......................................................................................................................................3
MAIN BODY..............................................................................................................................................4
CONCLUSION.........................................................................................................................................10
REFERENCES..........................................................................................................................................11

INTRODUCTION
Macroeconomics is an industry that examines the behavior of an entire economy — the
consumer or other large-scale processes. Macroeconomics analyses trends around the economy
such as inflation, price increases, growth rates, national revenues, GDP and shifts in joblessness.
Some of the main macroeconomic issues include: What causes unemployment? What is inflation
causing? How does economic growth rise or boost it? In order to assess how well a business
does, macroeconomics tries to consider its driving forces and to plan how results will change. In
this essay topic about impact of BREXIT on UK has been involved (Arnorsson and Zoega,
2018). In a decision to leave the European Union on 23 June 2016, BREXIT is a shortened form
of the terms "British" and "exit" (EU). 1 At 11 p.m. the BREXIT was held Mean Time of
Greenwich, Jan. 31, 2020. This avoided a BREXIT 'no deal,' which was greatly detrimental to
the United Kingdom economy. On 1 January 2021, then, the United Kingdom Parliament
accepted an interim resolution. The full chambers of the European Parliament must give majority
voting for ratification by 30 April 2021 to render this temporary agreement final. Whereas the
agreement makes the free exchange in tariffs and quotas, the UK-EU trade is also subject to
customs controls, which is not as easy as when the United Kingdom was a Member state.
The United Kingdom and the EU signed an interim Free Trade Deal on 24 December 2020,
guaranteeing the two parties to trading commodities without duties or quotas. However, crucial
information about the future, including such international trade, remains unclear, which make up
80 percent of the UK economy. On 31 January 2020, after the United Kingdom left the EU
(BREXIT), it negotiated a transitional duration of 11 months in order to conclude a new trade
agreement in respect to which the United Kingdom had been active in accordance with the EU's
laws. The EU and UK committed to a trade agreement with just days to be spared before the 31
December 2020 deadline after months of negotiations. If a settlement had not been made, trades
between the EU and the United Kingdom would not have complied with the World Trade
Organization (WTO) laws and tariffs (O'Rourke, 2019). This agreement, known as the Trade
and Cooperation Agreement (TCA), would ensure that trade in commodities continues without
restrictions or tariffs and address problems such as the Irish border and fisheries rights. However,
some relevant EU-U.K. trade concerns, such as investment banking legislation, were not

covered. Furthermore, there are customs restrictions and other nontariff barriers that make
trading between the UK and the EU more complicated.
MAIN BODY
Critically analyse the significance of BREXIT for the British people.
BREXIT is "Britain Departure" abbreviated form referring to the vote to abandon the European
Union by the United Kingdom. BREXIT includes the negotiation of international trade
agreements, regulations on citizens' identification, borders, etc. The procedure began on 23 June
2016, with a 51.9% referendum of 48.1%. After the passage of the BREXIT vote, BREXIT
formally began on 23 June 2016. For a referendum like this, though, there has been increasing
pressure for many years. For many factors, the referendum was held, such as migration,
autonomy and currency (Pettifor, 2017). In Britain, immigration is an ongoing issue. As many
other parts of Western Europe in the last 10 to 20 years Britain has seen a huge migration of
Middle East Islamic extremists. The economics has also shown that a greater proportion of the
people who have voted to leave the EU in places of Britain with a significant rise in the foreign-
born population. There are also claims that British people feel less connected with the EU than
other European people. British people are less European and have a clear United Kingdom
identity.
Monetary concerns have influenced the second referendum and criticized inaccurate facts. The
Leave campaign claimed during the vote that leaving the EU would raise weekly expenditure for
the UK in the order of a total of £350 million. Not only was wrong number, but the saved from
discounts and discounts inside the EU was not taken into consideration as well.
BREXIT’s Impact on Britain-
 The pound fell to a 31 year low on the day before the referendum vote. The volatility of
investment following BREXIT in the future of the UK has been mirrored in this. The
pound was boosted over the next year, as markets responded to the reporting. When the
transition proposals for BREXIT have been announced and repeatedly refused, the Pound
has once again strengthened. Although lower value currencies boost exports, there is a

lack of investor interest in pounds volatility. It also makes it unappealing to purchase UK
fixed-income securities, with FDI expected to slow down (Colantone and Stanig, 2018).
 The UK automobile industries fell 46% in 2017 and 80% over 3 years of tariff
uncertainty. While not the only cause for the decline, BREXIT played an important part.
British vehicle plants obtain European parts and even ship most assembled vehicles to
Europe. Auto production plants in the U.K. which becomes unprofitable because there
are import tariffs on vehicles.
 The supply chain can be affected even by BREXIT. Companies would need to keep
further inventories in order to prevent shortages, given potential border delays and extra
import project objectives. Honda already shut down its plant in Great Britain, while
Nissan wanted to build a new car platform in Japan rather than the UK. The decisions
were not taken by both firms due to BREXIT, however.
 The financial services sector is another sector that has been significantly affected. As
several regulatory rules for EU banks are in force, BREXIT will make the banking in the
UK unsure. UK banks could not, for instance, have access to European market after a
rough exit. In early 2019, banks and financing firms announced that reserves of 1 trillion
dollars have already been moved from the United Kingdom to the EU.
 The effects on UK trade with Europe will focus on UK-EU ties after BREXIT.
Regulatory variance that contributes to trading expense is expected to escalate over time,
undermining bilateral trade rates and UK role in European supply chains, in its most
possible scenarios—either the Swiss Model or FTA-based partnership. Consumers and
companies will bear the price (Emerson, 2017).
 It is projected that EU membership has increased UK trade in goods with others by 55
percent, which in 2013 amounted to £130 billion. (1) The following: (4) In general, there
is no evidence that trading with non-EU countries has cost it, although this may be a
concern in particular protected areas such as agriculture, shoes and clothes. In general, it
is not. Consumer costs can decrease in these areas, but ultimately they increase.
 Economists believe overwhelmingly or almost unanimously that leaving the European
Union would have a detrimental effect on the British short- and long-term economy.
Economists polls in 2016 demonstrated overwhelming consensus that the UK's actual per
capital level of income would probably be reduced by BREXIT. Current academic

research polls from 2019 and 2017 showed that the reliable figures for GDP in the UK
varied from 1,2-4,5% of GDP lost and 1-10% of the UK's capital earnings.
 The figures vary depending as to whether a hard and soft BREXIT is done in the UK.
The summary In January 2018, the UK's own BREXIT report found that, based on the
leaf scenario, UK economic development was slowed by 2–8% for at least 15 years after
BREXIT.
 Most economists say that eu membership has a strongly positive impact on exports, and
would worsen UK business if it entered the EU. The news is in English. According to a
report conducted by the economists of the University of Cambridge, one third of United
Kingdom's exporters will be duty free under deal BREXIT, with a UK recurrent to WTO
law, one-quarter faced strong trade restrictions and other 1%–10% risk exports. The
report is in English. A analysis in 2017 showed that "nearly every UK area is more
vulnerable than every other nation to BREXIT systematically." A survey in 2017
analyzing the economic impact of migration declines caused by BREXIT showed that
"the effects will be important"
 In a 2017 report investigating the effect of the migration declines due to BREXIT, "the
effect on the UK's GDP per capita (and GDP) is expected to be significantly negative,
which will have modest positive effects on employment in the service sector of low
skills."The interaction between economy and economic capital adjustments and migration
is not clear, but these changes may be significant.
 Just one sixth of the EU economy is accounted for in the UK. (5) The UK accounts for
1/10th of EU exports, while the UK exports half to the EU. Yet trade ties are so
unbalanced that Great Britain is a major source of demand for the rest of the European
Union. The UK's trading deficit with the EU has increased significantly in recent years
and in 2013 amounted to €66bn, equal to 0.6% of EU27 GDP (Sampson, 2017).
 Values are based in a limited number of nations, especially Germany, where the trade
deficit with UK in 2013 shipped €78 billion to the United Kingdom and imported €50
billion. As a percentage of GDP, however, a large number of countries have a trade
surplus with the UK. In Germany, Poland, Czech Republic, Belgium, Hungary, Latvia,
Estonia, Slovakia, this amounts to over 1 per cent of GDP.

 In comparison with firms in other Eu states, Uk businesses are comparatively upstream in
global value chains. In a limited number of industries, the UK's role in foreign supply
chains is particularly concentrated. Due to the vast share of businesses in other EU
nations, UK sold in 2009 almost $54 billion of industry and investment banking into the
supply chains of other countries. In the same year, Great Britain sold mining and
chemical goods for over 30 billion dollars and over 20 billion dollars to the multinational
supply chains in shipping, telecoms and wholesale and retail sectors.
 A survey by the British companies shows that BREXIT would have a negative rather than
positive effect not only on the FDI but also on investment intentions of UK companies.
29% further believe this would have a negative impact. (2) But, according to a different
survey, the EU features a bottom list of significant reasons, with less than 1 percent of
companies claiming that the UK wants to rely on European market entry in order to stay
the largest global attractive investment. There might be different sectors of opinion. For
example, investments in the manufacturing of vehicles, both on sales and because of the
lengthy European supply chains, seem to be in particular reliant on the internal market
(Adler-Nissen, Galpin and Rosamond, 2017).
 Half of Europe's non-EU businesses are in the UK and there are more HQs in the United
kingdom than are jointly founded in Germany, France, Germany and Switzerland. Given
the favorable tax care that Member States are available under the Caregiver Regulation,
this could become difficult after BREXIT. Britain would have either to accept third party
treatment under the Regulation, or it would have to agree with National Governments a
number of new quintuple arrangements. That will take a great deal of time.
The advantages and disadvantages of BREXIT-
Benefits of BREXIT-
When the UK makes a strong BREXIT, its own trade agreements and rules would be more open
to be created. A hard BREXIT is a situation where Britain offers the common market and
common market access. And those who want to remain in the EU see the regaining of
sovereignty as a victory.

For instance, EU law allows a resident of another EU nation to choose not to be restricted to
travel to and remain in the UK. This has resulted in substantial increases in immigration to the
UK and caused problems that satisfy accommodation and utility requirements (Oliver, 2016).
The UK will have absolute care of its borders with a hard BREXIT.
Drawbacks of BREXIT-
The United Kingdom profits from EU trading agreements with other world powers by becoming
part of the EU. As a country, as the strongest country in the group, the EU has a greater
negotiating force (Dorling, 2016). That is why the UK will sacrifice free trade and bargaining
leverage with other European countries by withdrawing. The UK can see less positive outcomes
when they try to recreate trade arrangements.
BREXIT's confusion also creates instability and hurts UK companies. In the case of hard
BREXIT, goods & services are tariff, and the cost of raw material in the United Kingdom and of
finished products is increased.
Key challenges the government might face to implement BREXIT:
The first important finding of NAO shows the challenges of providing effective, financially
valuable public services with end-to-end funding and in a changing atmosphere and increasing
public expectancy. Two main examples of this dilemma are the difficulty of implementing
substantial welfare reforms by universal credit policies and the continuing debates about
affordable social services for ageing populations (Jensen and Snaith, 2016).
The first challenge is power.. Since 2006, the government has seen its figures decrease by 26% –
a sign that, while the welfare cuts adopted since 2010 have had a major effect on capability,
resources limitation has become a long-term issue. (Take, for instance, into consideration, the
significant reductions made by the United Kingdom and Foreign Office in the last decade.)
When BREXIT officially starts today, the public service following the conclusion of the Second
World War has been less than before.

The dilemma of the first two emanates greatly from this third challenge. The Government
consistently "adds a list of operations without adequate priorities," according to the 2016 survey
of the Public Accounts Committee. In the face of criticism by John Maroni, CEO of the Public
Services, that "30-percent-too many to do well," some of the big schemes underway – Cross
rail/Thama, Hinkley, Point C, High Speed 2, and trident renouvellement – the government
doesn't seem to be out of position.
One important thing was the fact that important programs were not taken into account as a
whole. In particular, inadequate consideration is given to the availability of the necessary
expertise within agencies, the correct position of the right persons, the appropriate level of senior
management in projects etc. (NAO reports that 22 percent of positions for senior recruitment
competitions "were unfilled" in the 2015-2016 period) Ultimately, because of inadequate
employee planning, the government needs a "good view of its existing capabilities."
The size, capability and viability of both problems contribute to the skepticism of the public
sector to meet its demands (Liberini, Proto and Redoano, 2017). For instance, Margaret Hodge,
Chairman of the 2010-2015 Financial Services Authority, expressed frustration that government
officials had not recognized the effects of bad actions, "all too frequently the accountable
officials did not feel that their money was not their own." Special skepticism was raised in the
main IT projects: "Should any official mention the committee's proof of a new IT scheme, we
will laugh at the thought that it could be implemented on schedule, on a budget and save money."
However, the other issue is what can be called democratic confidence and, in particular, the
feeling among policymakers that the Public Sector does not want to pursue policies, which most
of the current administrations is dealing with (right and wrong). Perhaps his most severe recent
example was that he and many of his own leaders saw an institutionally resistance from the
education organization as a secretary of education in the alliance administration (Dennison and
Geddes, 2018).
Officials and commentators have emphasized the threat posed by BREXIT. For example, Lord
Kerslake, Civil Service Chief from 2012 to 2014, said he was concerned that there were just not
enough officials to do so while pursuing other initiatives at the same time, "there would be a
serious problem with how numbers would meet this huge demand." This is reflected in the views

of the former Government Minister and the Civil and Financial Service Union Lord O'Donnell,
who says the civil service "woefully underemployed or under," and Possibility that emphasizes
"in Whitehall and beyond, there is a shortage of skills and skills," as one of its leaders' main
concerns.
CONCLUSION
On the basis of above project report this can be concluded that BREXIT has mixed impact on
both UK economies as well as on the people of United Kingdom. Firstly, the vote to leave the
European Union is unusual for one of the "big" Member States. Negotiations on separation, in a
way such as divorce, must also be undertaken with all the assurances possible to ensure that the
currently precarious status of European integration does not increase confusion. The EU must
help to generate peace and trust both within and beyond its borders, and neither the outcome of
neither the referendum nor anything that has happened so far can lead to this. The further
report conclusion is a financial one, since the European Union is the most powerful trading
partner of the UK. The Union is responsible for 44% of Export sales and the Internal Currency is
a prime economic and commercial area for British firms. As a result, exiting the Union would
affect companies based on British soil in a very significant way, affecting all business sectors,
but especially the financial sector because London is important. There is no imaginable deal that
will enable the UK and the EU to enjoy access to the European internal market

REFERENCES
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