Fundamentals of Economics: Analyzing Brexit's Impact on UK Retail

This essay examines the impact of Brexit on the UK retail industry, focusing on its implications for trade, supply chains, and labor costs. It begins by defining economics and highlighting the significance of managing a country's economic conditions for growth and development. The essay then discusse...Read More

FUNDAMENTALS OF
ECONOMICS

TABLE OF CONTENTS
MAIN BODY...................................................................................................................................3
REFERENCES................................................................................................................................8

MAIN BODY
Economics is defined as the branch of knowledge which is related with the level of
production, consumption and transfer of wealth among the participant of an economy. For any
country to be successful the most essential aspect is to manage the economic condition of the
country in such a manner that it leads country in direction of growth and development. In the
similar context currently the biggest economic issue faced by UK economy is the problem of
BREXIT. The present essay will outline the impact of BREXIT over the wholesale and retail
industry of UK three areas that is motor trade, wholesale and retail.
BREXIT is the withdrawal of United Kingdom (UK) from the European Union (EU) and
from European Atomic Energy Community (EAEC) as well at the end of 31 January 2020. There
are many different countries in EU but UK decided to leave the EU and after months of
negotiation finally the deal happened. UK is the only and the first country to leave the EU after
being the member of EU for 47 years. Many of the studies and economist have shown that the
effects of BREXIT will create a damaging and long lasting impact over the country and many of
its industries as well. The major reason pertaining to this fact is that in EU there were many
different countries its members and because of BREXIT trade relation of UK was affected by
other EU countries. Hence, as a result of this other EU countries may reduce the trade with UK
and this in turn will result in decrease in the economic condition of UK.
Due to BREXIT the retail industry is the one which has been affected the most. This is
particularly because of the reason that UK economy comprises majorly of the retail companies.
There were many challenges and problem faced by the retail companies (BREXIT: Implication
for retail, 2021). The major challenge is the impact over the trade of these companies. The major
reason pertaining to the fact is that EU was the UK largest market for export of food and non-
alcoholic drinks. Due to BREXIT this trade has been affected as the relation between both EU
and UK have been affected to a great extent. In addition to this, another major challenge was the
imports was also affected from EU this was pertaining to the fact that because of the UK leaving
EU the trade with EU became more expensive and delivery time also increased. Hence, this
affected the business of retail companies in UK in a great manner (Bloom and et.al., 2019).
In addition to this the supply chain was also a major issue which was affected because of
the BREXIT. The major reason pertaining to this fact is that currently product mover freely
across the border among UK and other EU member states and no tariff was imposed. But after

the happening of BREXIT this tariff will be imposed and as a result of this the cost of trading
and supply chain will be increased. Hence, now UK will not like to bring the material from other
countries and this will affect the working efficiency of retail companies of UK. Moreover, the
labour cost is also affected because of BREXIT (Casadei and Iammarino, 2021). The major
reason pertaining to this fact is that major source of labour for retailers in UK was EU migrants
only. Now the BREXIT has resulted in restriction on freedom of movement of labour and this
restricted the labour pool in UK and as a result of this there is increase in cost of labour.
Along with the various sources it was analysed that even now UK is out of EU but then
also UK cannot be completely free from EU regulations. The major reason pertaining to this fact
is that if UK continues trade with any of the EU country then they have to ensure that all the
product and services are being made as per the guide of the EU standard and policies only.
Furthermore, the person is also a major aspect to be studied because of BREXIT. The major
reason pertaining to this fact is that firstly the labour issue was created because of EU labour
force is more. In addition to this government also has to decide that if there will be EU people
and migrant coming to UK whether they will be allowed or not. If not then how they will be
treated and what impact will it create over the people visiting to place and people already
working.
In addition to this, there is also an increased difficulty for online retailers as EU is
Britain’s largest trading partners while western European market accounts for 50 % of export
market. But because of BREXIT the rules and regulation may change and it might be possible
that how well the online business was performing it will not perform in the same manner post
BREXIT as well. Furthermore, the immigration that is freedom of movement has been at the
heart of BREXIT negotiation and is written in the agreement. All these new set of rules set out in
agreement pose a challenge to immigration and this in turn makes the EU workforce more costly.
Now the companies and business have to comply with two different types of regulatory system
in UK and EU as well. This also includes the conformity assessment if they are dealing in both
countries. In case if UK is trading only in UK market then they will have to comply with laws
and process of UK. But in case if company is trading with any of EU country then they to
comply with both the legislation of UK and EU as well (Portes and Forte, 2017).
Moreover, it is also the duty of the retail companies that whether they are trading in UK
or in EU the major focus must always are on the quality of the product. The major reason

pertaining to this fact is that when the company will not be providing better quality product then
this will have a great impact over the working. On the other side, when the quality will be
ensured and complied then this will motivate the consumer to buy the product or service whether
now it is not the part of EU (Symes and Phillipson, 2019). Hence, with this analysis it is clear
that the UK economy was suffering to a great extent because of BREXIT. Now if the companies
or government of country will not take any initiative or some strategies for improvement then
this will more worsen the position of country.
By referring to above all facts and data it is clear that there is great requirement of
management of the BREXIT. For this the most important thing is that the government of country
must intervene in the working of companies in retail sector. The major reason underlying this
fact is that the government can only assist the company in identifying the market inefficiency
and any issue within the market. This is pertaining to the reason that when there will be any of
the market discrepancy then this can only be solved by the government of that country. The fact
beneath this is that government know that where there is inefficiency within the market or which
sector of the economy is not operating in proper and effective manner. Only the government of
the country has the authority to take decision relating to any of the sectors or the element of the
economy. Hence, intervention of government of country is necessary in managing the impact of
BREXIT over retail and other sectors of the economy.
The suggested policies or procedure for management of BREXIT involves some of the
following recommendations-
Post BREXIT it is the duty of government that they must now increase their operational
response relating to the business and it’s functioning. The major reason pertaining to this fact is
that due to BREXIT there is great impact over the business and especially the retail sector. So
government of the country must list out some common steps or measures for the overall
businesses so that they all can effectively follow it in common.
In addition to this government must undertake a regulatory overview from the businesses
from time to time (Tetlow and Stojanovic, 2018). This is necessary because of the reason that
when the company will provide their response to the government, then they will come to know
that what businesses are facing in general. Hence, some common action can be taken by the
government which will assist the companies in dealing with issue of BREXIT.

In addition to the government, the business can also take many steps and strategies in
order to manage the impact of BREXIT over the business. For this the retail companies must
ensure that they keep the EU workforce happy and motivated. This is particularly necessary
because of the reason that if the employees of companies will not be happy and satisfied then
they will not be working in proper and effective manner (Lawless, 2020). Hence, for this time to
time financial and non- financial motivators must be provided to them so that they happy.
In addition to this the business owners must also time to time interact with the EU
workforce. This is necessary as this will also keep the employees motivated as the owner
themselves is interacting with the workforce. Along with this some information meeting and
outings can be created by business. This will make the coordination and communication better
among the employees both that is UK and EU based working in the same organization.
Moreover, the government of the country can also make sure that they take the feedback
from the employees. This is necessary because of the reason that when the government will take
random testing from employees relating to working in UK post BREXIT will provide an outline
that how employees are being treated within the company. In case the company is not taking
proper care of the employees who are EU based then some legal action can be taken against that
company. Also this feedback will outline the views and suggestions from the employees and this
can be implemented in the working of the company (Brown, Liñares-Zegarra and Wilson, 2018).
Also, the government of the country can provide some of the guidelines to the
stakeholders of the companies. This is particularly because of the reason that when the
stakeholder will be having proper knowledge that how they have to deal with the employees then
there will not be any problem or issue in managing the business and employees.
In the end the above report summarised that economics is the branch of knowledge which
involves analysis and evaluation of the economic condition of the country. For the effective
management of the country the most essential aspect for the country is effectively manage the
economic condition of them (Fagetan, 2021). The above report evaluated that BREXIT created a
majority of negative impact over the country and its various industries. The most highly affected
industry was retail industry of UK. This was pertaining to the reason that when UK left EU then
the retail sector is the one which was highly affected. The most essential impact was over the
cost of labour. This was pertaining to the fact that majority of workforce in UK was from EU and
as UK left the cost of labour was increased. In the end it was also inferred that for effective

management of BREXIT government of country need to intervene and suggest some policies and
procedures like trying to build good relation with other EU countries, keep the EU workforce
motivated and many others.

REFERENCES
Books and Journals
Bloom, N., and et.al., 2019. The impact of Brexit on UK firms (No. w26218). National Bureau
of Economic Research.
Brown, R., Liñares-Zegarra, J.M. and Wilson, J.O., 2018. What happens if the rules change? The
impact of brexit on the future strategic intentions of UK SMEs. The Impact of Brexit on
the Future Strategic Intentions of UK SMEs (March 1, 2018).
Casadei, P. and Iammarino, S., 2021. Trade policy shocks in the UK textile and apparel value
chain: Firm perceptions of Brexit uncertainty. Journal of International Business Policy,
pp.1-24.
Fagetan, A.M., 2021. The Regulation of Hedge Funds in the United Kingdom and the Impact of
Brexit. In The Regulation of Hedge Funds (pp. 241-282). Palgrave Macmillan, Cham.
Lawless, M., 2020. Ireland, Europe, and Brexit. Routledge International Handbook of Irish
Studies, 1.
Portes, J. and Forte, G., 2017. The economic impact of Brexit-induced reductions in migration.
Oxford Review of Economic Policy, 33(suppl_1), pp.S31-S44.
Symes, D. and Phillipson, J., 2019. 'A sea of troubles'(2): Brexit and the UK seafood supply
chain. Marine Policy, 102, pp.5-9.
Tetlow, G. and Stojanovic, A., 2018. Understanding the economic impact of Brexit. Institute for
government, pp.2-76.
Online
BREXIT: Implication for retail. 2021. [Online]. Available through: <
https://www.charlesrussellspeechlys.com/en/news-and-insights/blogs/brexit-
implications-for-you-and-your-business/retail/ >