EC4006 Fundamentals of Economics: Brexit and UK Retail Impact

This report provides a comprehensive analysis of the impact of Brexit on the UK retail industry. It begins with an introduction to fundamental economic concepts, setting the stage for an examination of the negative effects of Brexit on the retail sector, including decreased sales and consumer spending. The main body delves into the specific challenges faced by retailers, such as supply chain disruptions and the impact on high street sales. The report also explores government actions taken to mitigate the adverse effects of Brexit, including tax cuts and infrastructure investments. The conclusion summarizes the key findings, emphasizing the significant and multifaceted impact of Brexit on the retail industry and the government's efforts to address the economic challenges. The report highlights the complex interplay between economic policies and industry performance in the context of Brexit.

EC4006 Fundamentals of
Economics

Table of Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
Impact of Brexit upon retail industry...........................................................................................2
Government action to deal with Brexit........................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Economics fundamental ate that topics which are affect the entire economy at large
which also includes the statistics with regards to the unemployment and supply and demand. In
the same way, the chosen industry for this report is Retail industry which is also affected in
negative manner due to post Brexit. So, the study will critically evaluate the government that
needs to address any market inefficiencies.
MAIN BODY
Impact of Brexit upon retail industry
Brexit is the removal of United Kingdom from the European Union and it succeeding a
UK- wide vote in June 2016. This creates completely negative impact upon the industries such
that the entire country has affected in negative manner. Secondary study shows that Britain
retailer suffered from weaker sales after a month of Brexit and study reveals that earlier
customers are making bigger purchase before Brexit. Also, it is realized that impetus in the
economy is also declining during the weeks before Britain is schedule to officially vacation EU.
Such that British Retail Consortium as well as accountancy firm KPMG also said that entire
deals development actually released to 0.5% in a year after the post Brexit (UK retailers suffer
weaker sales due to Brexit uncertainty, 2019). Not only this, newspaper also publish that
customers were actually more unwilling to devote on the things and notwithstanding an refining
viewpoint for the household finance, while there is a sturdiest wage increase for British
workforces in a period
The impact of Brexit is not only on the top firm but it also affect the high street sales
because their sales is also dropped by 0.4% within a three months after a Brexit. Along with
this, when some data were complied by Barclaycard, which actually posses almost in and out
selling transaction of the country , also shows that the fashion wear had released by 5.2% and
also the section stores are dropped by 5.5%, while on the other accommodation sector are
stronger sector over the recent months as it was reported by slower sales growth i.e. around 7.4%
and 3.9% for pubs and restaurants (Abraham, 2018). Even many occasion such that Valentine’s
day also unsuccessful to increase the auctions of notepaper last month and in the same manner,

the hot season or weather also discouraged sales in furniture shops. On the other side, fashion
retailers and shops who sale jewelry as well as watches also suffered in a difficult month.
So, it is critically analyzed that there is a negative impact upon the retail industry of UK,
after post- brexit and but shoppers also have solution to fight with this. That is why, they start
offering the products with some discounts so that it helps to attract customers towards and
enhance the sales as well. Further, the household have also struggle with a puny pay growth and
the benefits also cut under the government’s austerity from the past decade (Aplin, 2018). Such
that the regular wage after increasing price which is still stable below the top and it is verified
the financial crisis. Further the top companies such that Marks and Spencer and Debenhams who
immediately answered by proclaiming the job cuts and store closure because of Brexit and this
lead to cause adverse situation upon them. Also, when UK is separated from EU which means
that there is a negative impact upon the overall UK firm such that the economic growth is also
quite close to stalling point in a months. Such that there is a 80% slow down of the economy
from the last month.
Eve when the survey is done by Barclaycard, it has been also analyzed that about 2000
people were found who are supported that companies actually cut down the all the essential
things and as a result, most of them also leave their job too because of slower economic rates
(Bonadio and Mimler, 2019). Around dozen of people had a concern because Brexit actually
damage the UK economy and it also cause their personal finance which suffer and as a result it
cause higher cost of everyday items too, so people are not ready to buy the products, this in turn
affect the overall economy of the country in opposite manner. So, it not only affect the retail
shoppers but it also cause or increase the risk of people i.e. suppliers, labor cost and import as
well as export. These all are also creates negative impact upon the overall business. Such that
post Brexit also leads to increase wages faster than the price and this also fluctuate the overall
economy too.
The BRC also state that slowdown in spending was actually evident in the stores and
online such that it added that food sales which had been holding better as compared to non- food
spending. During this scenario, the online non- food sales growth was consider the lowest on the
record and it is clearly reflected that Brexit is harming both customers and retailers (Howell,
2018). That is why, in order to improve the overall business, it is essential for the companies to

increase their promotional activities so that it will help to grab attention of many customers
towards them and this in turn help to increase the sales of the top companies as well. On the
other side, it is also critically analyzed that there were free movements of labor and talent
retention and this is actually become a reason for increase in the wages of the workers but on the
other side, there were many shopkeepers who are also faces issue with cost base and that is why,
they comply with the national living wage describe by the government.
The government also increase the tariff cost which is actually lower from last 40 years
when UK combine with a market. Even EU firm also pays 12 billion pound in a year for tariffs
to UK, only if the Britain turn the World Trade Organization terms after it left EU (Kaya and
et.al., 2018). So, if these contract is not conveyed then it may also forced by EU on the products
which are ended in UK and have to need to recognize their supply chain. Further, from the
Brexit, Supply chain of the retail sector is also affected such that every shopkeepers is adjusting
with the customer supply chain and around 28% of them are thinking that obtaining from diverse
countries as per the report generated by Barclays. Moreover, many of the retailers are also able to
determine the countries with a strong agreement net and also begin a channel in order to
minimize the import duty cost.
In addition to this, it is also analyzed that Brexit do affect the overall business including
the online retailers such that EU is known as Britains’s main interchange partner, while western
European markets are also version for more than 50% of the spread market for e- commerce.
Further, many of the online companies are also creates a base within EU and also start selling
the products online at low price (Ngwakwe, 2020). Therefore, it shows that Brexit affect overall
industry but it also affect the people who are associate with these and also creates negative
impact upon the overall economy of the country in opposite manner as well.
Government action to deal with Brexit
In order to deal with the Brexit, government of UK takes many steps in order to minimize
the impact of issue such that government cut down the tax from 20% to fire up the consumer
spending, which is actually a main driver of Economy of UK. Though government also start
working immediately after the brexit and that is why, it start surveying in order to decide it hits
the business or not (Ways through which government could lift economy’s post- Brexit, 2019).
Further, government also take man steps in order to minimize the issue of Brexit upon the

customers as well as business and that is why, it start spending upon the infrastructure because
business are influence the administration in order to devote more on the infrastructure like, roads
and rail links. Also, the top business are also contend that they must lower down the interest
rates provides them a good time for steal cash and invest the same. As a result, it provide most of
the person to get employed and project would also yield long term economic gains as well. That
is why, government start spending on these so that it will help to minimize the issue off
economic growth.
Reduce planned roses to the national living wage is also another thing which government
of UK perform. This policy is introduce in April and also government promised that they will
increase it in each and every year. With an economic prospects, many of the employers says that
if it will rise then it will be less affordable. That is why, they have to low pay the commission
and the self-governing body which also advise the administration on minimum wages and theen
recommend the same to rise in April 2017 (Schaub, 2017). On the other side, it is critically
evaluated by the Anti- poverty campaigners that paying low amount is plays a crucial part of
UK’ overall productivity and even highly par thresholds allow the firm to improve the
management, provide effective training and overall efficiency as well.
Along with this, government of UK also introduce the Helicopter money schemes under
which a central bank publish cash so that all the finance ministers provide the same to citizen
and also spend the same with big infrastructure projects as well. Therefore, in order to improve
the economic condition of entire company, the government took this scheme and another option
is also available for the Treasury to issue the new infrastructure bonds for the public asset
schemes so that it generate an option of financing (Wright, 2016). During this critical situation,
the biggest task of government is to negotiate with the new job agreements and if any action is
taken by the Bank of England will definitely have only limited impact i.e. to improve the UK’s
trading relationship with EU and the rest of the world drift into an uncertain future as well.
In addition to this, it is also analyzed by the UK government and they also make changes
in the domestic policy that is to improve the immigration regime for an international staff. It
means that UK’s economic success and the global influence outside the EU will be maximized
by the government putting in an immigration system which also support the UK to be a
destination of choice for all the people. Along with this, government also increase the

investment in a research such that they request company to invest in innovation so that it will
help to enhance the overall business and also grab attention of many customers towards it
(Howell, 2018). If, the UK’s exit from EU are cause thee result in fall in public funding which is
available for research and innovation then government should immediately make sure that any
loss replace by domestic funding. Thus, these strategies of the government creates positive
impact upon the overall economy of the country and also raise the GDP as well.
CONCLUSION
By summing up above, it has been concluded that Brexit creates direct impact upon the
business especially in retail industry. Such that it lower down the sales of the company and even
customers are not ready to spend the money on these and that is why, it affect the overall
business in opposite manner. Further, report also concluded that government also tries to
introduce the schemes so that it will not cause any negative impact such that it reduce the tax rate
up to 20% so that customers are ready to purchase the products. Also, report concluded that by
developing in the infrastructure, most of the employees got job and this in turn helps to minimize
the issue of economy and also provide range of option to employees.

REFERENCES
Books and Journals
Abraham, M., 2018. Brexit anouncement effect on the New Zealand stock market: Theory and
evidence. New Zealand Journal of Applied Business Research.16(1). p.1.
Aplin, T., 2018. The Impact of the Information Society Directive on UK Copyright
Law. Copyright in the Information Society: A Guide to National Implementation of the EU
Directive 2nd edition (Edward Elgar 2018), pp.2019-16.
Bonadio, E. and Mimler, M., 2019. Brexit Implications for Geographical Indications of Food and
Beverages. European Intellectual Property Review, 1.
Howell, E., 2018. An Analysis of the Prospectus Regime: The EU Reforms and the
‘Brexit’Factor. European Company and Financial Law Review. 15(1). pp.69-100.
Kaya, O. and et.al., 2018. Brexit impact on investment banking in Europe.
Ngwakwe, C. C., 2020. Analysis of the Differential Effect of Brexit on the FTSE Stock and
Money Market Performance. Acta Universitatis Danubius. Œconomica. 16(1).
Schaub, M., 2017. Initial wealth effects of the Brexit vote on UK ADRs. Applied Economics
Letters. 24(17). pp.1232-1236.
Wright, W., 2016. The Potential Impact of Brexit on European Capital Markets. New Financial.
Online
UK retailers suffer weaker sales due to Brexit uncertainty. 2019. [Online]. Available through: <
https://www.theguardian.com/business/2019/mar/05/uk-retailers-suffer-weaker-sales-due-
to-brexit-uncertainty >.
Ways through which government could lift economy’s post- Brexit. 2019. [Online]. Available
through: <https://www.theguardian.com/business/2016/aug/05/seven-ways-government-
could-lift-the-economys-post-brexit-vote-blues>.