ECO 4012 - Analyzing Brexit's Impact on UK Living Standards (2022)

This essay provides an economic policy analysis of the positive and negative effects of Brexit on the standards of living in the UK. It discusses how Brexit has influenced the UK's relationship with European countries and created opportunities for new relations with non-EU nations. The analysis covers various aspects, including trade, fiscal policies, competition, and regulatory frameworks. Positive impacts include the UK's control over fisheries, taxes, and subsidies, along with the ability to implement independent policies regarding Covid-19 response and international trade. The essay also explores the development of new trade deals, advancements in technology, and regulatory reforms aimed at boosting economic growth and innovation. Furthermore, it examines the impact on specific sectors like finance, manufacturing, and digital markets, highlighting initiatives to support families, education, and healthcare. The essay concludes by emphasizing the potential for the UK to establish itself as a well-developed nation with enhanced international competitiveness.

Positive and negative effects of
Brexit on standards of living in the
UK

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
Outlining positive & negative effects of BREXIT on UK’s economy..................................3
CONCLUSION..........................................................................................................................9
REFERENCES.........................................................................................................................10

INTRODUCTION
Economic Policy Analysis can be defined as a procedure to identify all the potential
policy alternatives that can solve problem and then comparing all options to choose the most
effective and feasible one. Now, ‘BREXIT is combination of two words, ‘Britain’ & ‘Exit’
which refers to withdrawal of UK from European Union (EU). The report will discuss and
evaluate all positive and negative effects of BREXIT in UK. There will be a significant
changes in UK’s relations with other European countries & also opportunities to develop new
relations with non-EU nations. EU is the largest trade partner of UK, therefore, the outcome
of such an action will shape country’s relationship with largest partner in trade.
Outlining positive & negative effects of BREXIT on UK’s economy
When the announcement was made regarding UK exiting EU, the value of pound in the
market rose by 0.47% against US dollar. However, it was already known in the market about
expected cost of BREXIT to British economy. In order to overcome the ill effects of Brexit
decision, longer is required by British economy (Portes, 2022). The current scenarios of
Covid-19 impacts along with restrictions on trade, it is very much difficult to identify and
analyse the effects of Brexit upon different sectors of economy.
There are various economic studies that shows the effects of Brexit on UK and its likely
impact on longer periods. Studies estimates the level of output in year 2030 post-Brexit &
pre-Brexit. All considerations like strength of trade, investment levels & inks between
countries and economic growth have been studied.
The European Union membership has reduced the cost of trade between UK and rest of
Europe, i.e. all trade tariffs have been removed within EU which allows free trade practices.
Such reductions in trade tariffs have led to increase in trade between UK and other EU
nations. It benefitted UK because customers’ had access to large variety of goods and
services at lower prices. Businesses also had an opportunity to new export facilities which
enhanced their sales and profit margin. With such trading options, it led to increase in output,
income & standard of living. UK suppliers are provided with funds £138,760 to Central
government in order to simplify and speed up the procurement process (Hobolt and et.al.,
2022). This measure will generate more opportunities for small businesses and social
enterprises.
Further, manufacturers of specialized Auto parts that rely on other regions for acquiring
other parts in finished products have more power to seek other alternatives for their products.

Company like Nissan, can obtain their parts from other Asian countries or local UK and
enjoy new sales and wide opportunities. Furthermore, the deal which was stuck between UK
and EU is no more bothering UK because now they have full control over Fisheries Act
which gives them the power to bring more quota for British Fishermen & for coastal
communities.
In addition to this, UK has now the power to control money and taxes & establish fiscal
policies in order to procure & grant subsidies (Stoupos and Kiohos, 2021). Brexit decision
has also helped UK to minimize liabilities arising from EU’s Covid-19 response. UK was
able to build own policies regarding furlough scheme and providing vaccination facilities.
More funds was allocated to NHS so that they can spend more. The complete new Global
Tariff helped businesses to reduce administrative burdens by scrapping off various taxes on
products & services. Such a move led to tariff free trade in UK. The government has also
given £180 million in order to make UK the most effective border in the world to make deals
with. It will help in modernizing the controls over import export regime and better trade
interactions. Various hubs like Trade & Investment Hubs in Scotland, Wales and Northern
Ireland have been developed to boost the exports and bring benefits of trade policy to support
businesses and access larger markets like India, Japan & US. This in turn will effectively
increase the money supply in the country which will raise the standard of living of people.
Another significant impact of BREXIT is that the UK’s Competition & Markets
Authority has sole power to make clear decisions about all mergers and acquisitions taking
place in country. It can restrict the mergers which will harm UK consumers and can place
remedies to address such competition (Faccini and Palombo, 2021). The new iconic blue
passports have been again introduced by UK government which is the most technologically
advanced passports.
BREXIT has given UK a new competitive regime for its digital markets by powering big
tech big tech businesses and establishing digital markets. AI strategy has been to put in place
which enables Britain to become AI superpower. The laws for small & micro entities have
been made simpler which requires them to generate less information to Companies House
and reducing the reporting burden on them.
Government has also focused on reforming the EU financial services regulations where
they have set new regulatory framework to protect the interests of UK public and giving more
powers to Financial Conduct Authority and Prudential Regulation Authority. New policies
implemented gives more flexible Risk margins to support insurance firms and suit insurance
market. UK is known for its Fintech hub and Open banking systems. Exiting EU has given

power to UK to take steps towards innovation and reducing unnecessary requirements that
were barriers to Open banking.
Apart from fiscal policy and money matters, the new UK government has also focused
on supporting families and people by enhancing consumer (Cieślik and Ryan, 2021). During
times of pandemic, consumers were allowed to have contact-less purchases by increasing
contactless limits to £100. The government also has aimed to remove extension of motor
insurance to private land. Such a move has helped to reduce the substantial increase in
insurance premiums of £50 a year.
For educational purposes, a Turing Scheme has been set which is international students
exchange scheme to enable opportunities for education and training across the work. This
initiative taken by UK government will help UK students to wider their experience level in
different cultures and international traditions. Additionally, for providing best education and
training to students, government has set up International Qualified Teacher Status Standards
in order to have best teachers to educate and inspire next generations.
New clinical trial set-ups and with more regulations have led to innovative medical
treatments. It will help in reaching UK public faster and better. It will also ensure that UK
science sector leads in front row and provides better and white collar jobs. The new Health &
Care Bill set enables NHS to provide healthcare facilities in a more flexible manner and
reducing wastage and bureaucracy. All such initiates and actions will help general people to
have better way and standard of life.
On the recommendations of Advisory control on the misuse of drugs, the UK
government has proposed the law for tracing controlled drug content in consumer products
for the very first time which was not possible under EU regime. This will help in removing
harmfully potential products out of customer reach by driving such companies out.
The vision of the Global Britain has come true after the departure from EU which will
help the country to make new relations with other nations and strengthen them by making
profitable deals. Various trade deals have been signed with nations like India, Australia &
Japan that will benefit businesses and consumers by creating more jobs. Consumers will have
more access to wide range of products which will further enhance their living standard.
Further, the partnership with Association of Southeast Asian Nations (ASEAN) has led to
larger cooperation on issues like trade & investment, climate change, technology &
education. The UK taking the seat back in World Trade Organization has secured commercial
benefits for businesses to implement new trade rules and strengthen UK.

Another strategy related to UK defence and security industrial has been set up that will
promote investment in UK and defence exports. Such policy changes and transformation will
enhance the speed of procurement and growth of innovation & technology advancement.
The regulatory system of UK is well-known for all its regulations & frameworks. For the
economic growth to increase and innovation to boost in the country, a renewed regulatory
framework was required (Brexit, 2022.). It will limit market competition which harms small
businesses. BREXIT has given UK a chance to charge the sectors with competitive advantage
in order to drive economic growth and creating jobs which will further enhance standard of
living of UK people. International competitiveness has built in sectors like financial services,
automotive, digital energy, etc. which is possible only through strict regulation and
guidelines. Government is engaging in robust regulation across the world to influence the
decisions of others & solve problems in global approach. After BREXIT, UK transferred EU
legislation as retained EU law through the European Union (Withdrawal) Act 2018 to reform
actions to meet UK’s priorities to unlock growth.
BREXIT has given UK a chance to excel in future opportunities and emerge as a well-
developed nation (Impact of Brexit on UK Businesses – Positive & Negative Effects, 2019). It
has given an opportunity to regulate digital markets and AI. Government is making more
agile moves to implement proposals developed by EU. The UK is the global leader of
Quantum technology which can drive innovation and solve biggest challenges of tomorrow
world. The research and development in science & technology advancement is bringing
researchers, governments, & businesses together where partners will created to produce
commercial products and identify better jobs.
After US, UK is in line for making investments in quantum technologies. To achieve all
the success, UK Quantum strategy has been developed to focus on early stage and innovative
businesses & to diversify hub area. There will be expansion of areas under regional strength
with huge manufacturing clusters in South Wales. Further, an innovative friendly data
protection regime has been put in place to make proper use of data and support science and
tech system. The use of digital technology in trade has helped to reduce barriers to trade by
digitizing trade processes and reducing bureaucratic requirements which will give maximum
opportunities in trade (Edward and et.al., 2022). The digital platform is so built which can be
easily trusted by citizens. Electronic Trade Documents reduces cost of exportation by
reducing wastage of paperwork. Data adequacy partnership with leading economies has led to
more reliable & secured network which has helped UK to access to personal banking and
healthcare and upholding democratic values

Moving on to Business & Industry, more technologically advanced finance sector has
been developed after BREXIT which gives competitive advantage to UK. There is an
establishment of international trading relationships that will be beneficial for UK Professional
& Business Service sector. This sector includes marketing, architecture, audit and accounting,
management consulting, rental & leasing activities, etc. Professional Qualification Bill has
given more powers and greater economy to regulators. In addition to this, post-BREXIT,
when UK is dealing with leading economies of the world, there is a requirement to establish
cost effective measures in order to solve cross border disputes. This creates the demand of
global legal center to strengthen cooperation and finding out new opportunities with
international partners.
The UK retail & consumer manufacturing sector has also competitive advantage in home
market as well as in global market. The tagline of “Made in the UK, Sold to the World” has
led to high end & heritage products to lead in Asia & USA (May, Arancibia and Manning,
2021). After leaving EU Customs Union, UK business can leverage the sustainable & ‘UK-
based’ products easily in the market and can earn huge profits. This will enhance money
supply in the country which will further lead to enhancement in standard of living. The excel
of the FMCG sector will led to creation of more job opportunities which will further lead to
automation & innovation.
Apart from this, media and sport sector also play an important role in UK’s economy.
After implementing Audiovisual and Media Services Directive, UK has removed the EU
charter of Fundamental Rights from broadcasting law (Adam, 2022).
On the other hand, talking about the negative impacts of BREXIT on UK is that the UK
enjoyed a lot of benefits from trade deals which happened between EU and rest of the world.
As an entire on unit, EU exert a strong pressure on other nations in terms of bargaining
power, etc. After BREXIT, UK’s negotiating powers has affected badly and free trade
practices has come to end with European nations. There are less favorable and more difficult
trade deals with other nations and UK (Pollitt, 2022). There is a lot of uncertainties among
businesses and companies already existing & operating within UK. It has led to increase in
cost of raw materials & finished goods, thereby making expensive trade deals.
On the day, UK made its announcement regarding departure from EU, the value of
pound declined to 31-year low. Investors and other businessmen were completely uncertain
about UK’s future and its economy (Abuzayed, Al-Fayoumi and Bouri, 2022). With such a
lower currency value, exports became extremely cheaper, however, investor confidence was

shaken to bits because of volatility in pound rates. Further, it was not considered good to
invest in foreign direct investments or fixed income assets.
Further, in the initial stage of BREXIT, UK banks did not had access to European market
which also posed a problem. Around $1 trillion worth of assets were shifted from UK to EU.
It led to shortage of funds with UK banks which declined the money supply in country.
People were not able to make purchases that affected their standard of living. Under the EU
law. It was stated that any person can live and work in UK with all the rights. Also, British
people could live in any part of EU. However, post BREXIT, there was huge immigration
into the country especially from eastern and southern Europe (Adedoyin and et.al., 2021). It
posed a lot of difficulties for the government regarding housing facilities and provision of
services. During times of pandemic, economic significance was badly affected along with
huge outflows from the country. Brexit has also affected the younger generation who were in
job. One forecast predicted that there is a shortage of labor force of 3 million by 2030. All
such jobs are not available at the time in UK. Even. Employers are finding it very difficult to
fill up the vacant job positions. The EU born workers has also left UK which affected low
skilled and medium jobs badly. Apart from this, UK’s export also showed a declining trend
from 7.1% to 6.2% from year 2015 to 2019. The pandemic situation made it worse which led
to additional trade diversion. Brexit deal lead to reduced higher trade tariffs, however, to
enter the EU market, there was a requirement of at least one “non-tariff” barrier which leads
to more red tapism. A lot of paperwork related to inspection certificates, custom
requirements, etc. Increases complexity on cross border transactions and enhance cost of
trading.
Post BREXIT, there were problems of export and import that created issues for UK
retailers where they stockpiled food. This resulted into acute shortage of food products and
problems of supply chain. Public started to panic buying due to the news of shortage. At
times of pandemic, people were not having enough funds to buy things and due false shortage
they have to buy more which created huge problems and affected their standard of living.
Manufacturing sector was also affected in a badly manner. Modern methods of
manufacturing that makes use of integrated and complex supply chains across various nations
of EU and UK complicated the manufacturing process. Major companies like Nissan, BMW,
TOYOTA, etc. Had to decrease their no. Of employees and shut down plants in UK. Dutch
conglomerate Phillips had to close it only one factory in UK.
Furthermore, financial industry also witnessed many ups and down after BREXIT.
BREXIT required relocating of many important locations and employees from UK to EU and

requiring compulsory registration and licensing to operate smoothly in EU. Major Banks like
JP Morgan, Bank Of America, UBS, etc. had to move their employees and assets from
London to EU locations (Qiao and et.al., 2021). Approximately, trillions of dollars of
financial assets moved from London. In addition to this, there was also a job transfer of more
than 7500 finance sector jobs from UK to European cities.
Moreover, there were several differences between pharmaceutical companies in
standards of medicine in EU and UK. There was a lot of delay in distribution of medicine due
to imposing law of border checks.
There were also legal challenges posed by BREXIT on travel and shipping. Flight in
future will be restricted within EU, across and within member states. Additionally, it took
very much in the movement of goods and people by air water or road. There will be
requirements of passports and visas for travelers moving across UK and EU (Crafts, 2022).
Freight haulers will be requiring permits and border checks to enter the markets which
involve a lot of paperwork and several custom agents.
Another negative effect of BREXIT was on the workforce due to less freedom of
movement. Businesses in UK cannot rely on cheap labor and have invest handsome amount
in training and apprenticeship programs in order to train and develop skills in workers.
Companies also need to apply to government in order to become approved employer sponsor.
CONCLUSION
In the end, it can be concluded that BREXIT has both positive and negative impacts on
country’s economy. In the initial stage, it has faced many problems in almost all the sectors
of economy. There were a lot of problems related to job loss, workforce shortage, disrupted
supply chains, etc. However, with the passage of time, all such issues were solved effectively
by making various strategies and policies. It can also be said that UK now has the sole power
to make decisions about all the aspects related to fiscal policy, economic development policy,
etc. without any restrictions and interference of European Union.

REFERENCES
Books and Journals
Abuzayed, B., Al-Fayoumi, N. and Bouri, E., 2022. Hedging UK stock portfolios with gold
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Adam, C., 2022. The emerging contours of a post-Brexit Britain. Oxford Review of Economic
Policy. 38(1). pp.1-10.
Adedoyin, F. F. and et.al., 2021. Environmental consequences of economic complexities in
the EU amidst a booming tourism industry: accounting for the role of brexit and other
crisis events. Journal of Cleaner Production. 305. p.127117.
Cieślik, A. and Ryan, M., 2021. Brexit and the location of Japanese direct investment in
European regions. European Urban and Regional Studies. 28(1). pp.66-73.
Crafts, N., 2022. Brexit and control of subsidies. Oxford Review of Economic Policy. 38(1).
pp.154-164.
Edward, E. and et.al., 2022. Social Network Evolution: The Case of UK Companies Before
and After Brexit. Emerging Science Journal. 6(1). pp.1-13.
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support for the European Union. European Union Politics. 23(1). pp.100-119.
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decision: A behavioural approach. Journal of Rural Studies, 81, pp.281-293.
Pollitt, M. G., 2022. The further economic consequences of Brexit: energy. Oxford Review of
Economic Policy. 38(1). pp.165-178.
Portes, J., 2022. Immigration and the UK economy after Brexit. Oxford Review of Economic
Policy. 38(1). pp.82-96.
Qiao, K. and et.al., 2021. Brexit and its impact on the US stock market. Journal of Systems
Science and Complexity. 34(3).pp.1044-1062.
Stoupos, N. and Kiohos, A., 2021. BREXIT referendum’s impact on the financial markets in
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Online
Brexit. 2022. [Online]. Available through:
<https://corporatefinanceinstitute.com/resources/knowledge/economics/brexit/>
Impact of Brexit on UK Businesses – Positive & Negative Effects. 2019. [Online]. Available
through: https://www.mscnotaries.com/impact-brexit-uk-businesses/