A Comprehensive Analysis of Brexit's Impact on UK Foreign Investment

This essay explores the multifaceted impact of Brexit on foreign investment in the United Kingdom, examining its influence on trade volumes, the challenges faced by UK businesses, and the potential benefits of foreign investment in the post-Brexit landscape. It reviews existing literature to assess the effects of Brexit on trade with the EU, noting a significant drop in UK exports and imports following the transition. The analysis considers both Brexit and non-Brexit factors, such as the COVID-19 pandemic, in evaluating trade fluctuations. Furthermore, the essay investigates the frameworks governing foreign investment in the context of Brexit, aiming to provide insights into the evolving economic dynamics and offering recommendations for future research and policy considerations. The study uses secondary research methodologies, including interpretivism philosophy and inductive approaches, to analyze data and draw conclusions about the overall impact of Brexit on the UK's foreign investment environment.

To identify the Impact
of Brexit on the foreign
investment of UK

Contents
CHAPTER 1: INTRODUCTION ...................................................................................................3
CHAPTER 2: LITERATURE REVIEW.........................................................................................6
RESEARCH METHODOLOGY ..................................................................................................23
CHAPTER 4: DATA ANALYSIS AND DISCUSSION .............................................................29
CHAPTER 5: CONCLUSION AND RECOMMENDATION ....................................................37
Conclusion.................................................................................................................................37
Recommendation.......................................................................................................................39
Limitation of research................................................................................................................41
Reflection...................................................................................................................................41
REFERENCES .............................................................................................................................43

CHAPTER 1: INTRODUCTION
Overview of the topic
BREXIT is the name given by the European Union for the departure of the United
Kingdom. It enacted the foreign investment in a certain way which resulted in investing outside
of the country for expanding the existing business. In all the countries the WTO manages all the
trade protocols which have to be followed by all the nations. But, Europe has its different
committees in which all the countries comprising in Europe have to follow the structure and the
regulations of the merchandise for the products and services (Eichengreen, 2019). But when the
UK withdrew itself from the EU, it majorly impacted
the policies and the market of Europe adversely. The principles changed, the
immigration of various people across the borders flipped and lead to the downfall of the
economy. This led to an increase in foreign investment. Foreign Investment is done for
enhancing the business opportunities in the international market, which synonymously upgrade
the companies for expansion. It is the expenditure that the domestic organisations tend to make
in foreign countries. This helps the entities in making a new investment and helps in sustaining
in the market for the long – term.
Research aim and objectives
Aim: To determine the negative or positive impact of Brexit on the foreign investment flowing
into UK.
Objectives:
1. To assess the influence on the trade volume of UK after the exit of the European Union.
2. To evaluate the various challenge that UK faced while carrying out its business
operations.
3. To determine the benefits of foreign investment in terms of Brexit (Henry and Smith,
2021).
4. To identify the framework of foreign investment in the context of Brexit for the trade of
goods and services in the United Kingdom.
Research questions
1. Find out the impact of Brexit on the trade volume of UK?
2. What are the challenges that are faced by UK for carrying out the business activities?

3. What is the impact of foreign investment in Brexit and to other countries?
4. What are the frameworks of the foreign investment related to the merchandise of the
goods and services?
The rationale of the study
The reason behind the conduct of this study is to find out the impact of Britain’s exit
from the European Union. It thereby addresses the research aim and is very significant for
knowing the impact of Brexit. This study will help the economies of various nations to before
think about their doings (Moskal, 2018). It should be highlighted that this research can be
accomplished when the data about the post-impact of Brexit can be collected. This can happen
by analysing the results and position of various economies of the countries in Europe which have
been affected due to the exit of the UK from the European Union. For the students, the research
will assist the students in the improvement of the general knowledge about the happening in the
world which can affect the economy of several nations. It will help the students in knowing
about the business which has flourished in the times and how the non–following of the WTO and
the trade committee regulation affects the organisations adversely.
Outline of the methodology
The methodology defined what research techniques are being utilised for the
accomplishment of the research objectives. It will help in analysing the data regarding the
fulfilment of the topic. In research, several methodologies are given which are used for the
collection of the data. In this study, secondary research is done. The methodologies which will be
are interpretivism philosophy, inductive approach, qualitative choice (Napiórkowski, 2018).
These are the key and the essential methodologies that need to be fulfilled for carrying out the
research for getting valid outcomes within the minimum period.
Structure of the report
The research paper consists of various chapters which will help the researcher in
systematically completing the activities. For this the structure of the report is to be framed which
is defined below:
 Introduction: It is the first chapter of the study which encloses the understanding of the
topic for the researcher. This chapter includes the topic of the study, aims, objectives, and
the research question. It also includes an overview of the topic, the reasons behind the

study and the methodology that the investigator will use for the completion of the
research.
 Literature Review: This is the second chapter through which the secondary data about
the topic will be collected. Therese are various sources through which the investigator
can gather information regarding the impact of Brexit on foreign investment. The number
of sources can be books, publications, articles, research and many more.
 Methodology: The type of approach that the research uses regarding the study is covered
in this chapter. These approaches are qualitative, secondary, inductive approach,
interpretivism philosophy and qualitative choice (Simionescu, 2018).
 Results and Analysis: This is the other chapter that assists in the evaluation of the
information which has been gathered from the question and through the secondary
research. It can be analysed with the help of any research analytical tool. For this
evaluation, the thematic analysis.
 Conclusion and Recommendations: This is the last chapter from which the conclusion
will be made regarding the research study. The finding and the suggestion for the
investigators will be made here according to the whole study which will be proceeded. It
will help in attaining the aims and objectives of the researcher successfully. The
suggestion will help the researchers for doing further research on the topic similar to this
for finding the research gaps.

CHAPTER 2: LITERATURE REVIEW
Find out the impact of Brexit on the trade volume of UK?
From the point of view Sebastian Whale and George Arnett (2022), the impact of the Covid
19 and Brexit has affected UK trade volume and their performance has been considered to be
worse than comparable EU economies. Despite they are being a part of the European Union, the
supply chain system they had with the UK has been enormous. The trade of the UK with the EU
has been dropped immediately at the end of the Brexit transition and the exports made by the UK
falls by 45% and imports by 33% from 2019 to 2021 which affected the businessman and their
businesses.
The other countries such as Gemrany, France, Spain, Italy are some of the nations which are
the part of European union and have mostly recovered from the Covid 19 but in the case of the
UK where flows in the Quarter 3 of 2021 were lower in the context of GDP since 2009.

The worst is that trade in the rest of Europe was going to be increasing and in the case of the
UK it is decreasing. The head of international affairs, James Sibley, of the small business told
that small and medium enterprises have been severely affected disproportionately due to the
impact of Covid 19 and Brexit as they were experiencing low trade volume or their business
practices have been disrupted or their exports have been hampered completely.
According to Michael Gasiorek (2022), a decrease in trade with the European Union has
been expected due to the trade and cooperation agreement taking place between the UK and the
EU from the 1st of January.

Figure 1 Change in UK exports compared with the average of 2018-20 for the same months
The trade made by the UK in January shows a higher amount of decline. However, the
figures for February show some sign of recovery but trading significantly lowered as compared
to the previous year. The export made by the UK has been down by 13% in February 2021 and
the figures for January show a decline of 25%. The conclusion for such results is that the decline
in the exports that have been made to the European Union is almost twice the decline in trade to
non-European Union countries. The above indicators show that there is a high degree of
fluctuation in the statistics listed month-wise. However, there is some reverberation in February
but there is clear evidence regarding the negative influence of leaving the EU customs union and
single market on the UK trade with the EU.
As per the viewpoint of Thomas Pope (2021), On 31st December 2020, the UK left the
European union singly market and that’s made the highest change in UK terms of trading activity
in s generation. The new trade and cooperation agreement has been entered on 24th December
which provide maximum ventures and companies hardly a week to judge new changes that has
been taken place.

Figure 2Outward foreign direct investment by origin
On the basis of the above statistics present in the graph regarding the UK trade, they show
the dramatic fall between the UK and the bloc. However, such fall is related to both brexit and
non brexit factors which includes covid 19 pandemic too. The new statistics shows towards short
term fluctuations and the official cannot discard such data point as it helps the business person
towards reducing the disruption. Some of fall that has been taken place to the European union is
due to disruption at the end of transition period which consist of those entities which opt not to
go for trading as they are considering the new rules so that they can avoid getting caught up in
delays.
According to the point of view of Alasdair Sandford (2021), after implementation of the
brexit, there are various areas in the life that may seem differences and their impact can be seen
on both the people and businesses. However, the impact of the pandemic has a separate impact
on the economy of UK. The exports that has been made by UK is the severe hit on European
union despite such deal has been made on the last minute corner ensuring tariff free trade. There
are several sector which shows improvement but the problem run deeper and their impact in
higher, the UK government has highlighted at that time. The official figures that has been
released showed that UK recorded the deeper fall in trade with the European union and the
economy has struggled a lot post Brexit rules and the pandemic respectively. The goods that has
exported showed the downfall of nearly 41% and imports showed the downfall of around 29%
with the separation of the United Kingdom from the European union. Not only this higher

amount of taxes and cost also affected the economy very badly and it makes difficult for the
entrepreneur to carry out their business in the smooth manner as their business in generating
losses on the regular course of interval. There has been a survey which has been conducted on
small number of firms showed the result that their sales volume has been temporary halted due to
post brexit rules.
Source: Alasdair Sandford (2021)
The figures that has been released on march 18 showed that the import that usually made
from the Britain fall by 68% in January month as compare to last year same month.
Source: Alasdair Sandford (2021)

The import that has been made from UK shows the decline of 56% and such figures drop
page is 1/3rd. Not only this there are several sectors that has been affected individually such as
foods and agriculture, fishing and so on. Such impact is not only for one period but it would hold
for the longer period as there are enjoying the treaty when the business of all the countries are
working together and if separation has been made in the form of Brexit its effect can been seen
amongst all categories of individual and business persons in the respective manner.
According to Hantzsche, Kara, and Young (2019), Brexit came into force and 2 years since
UK left the European Union and since then the change started happening. From then the
enactment of the Trade and Cooperation Agreement (TCA) started at different levels in both the
channels. EU had imposed full check and customs on UK exports in 2021 while UK had
imposed the full checks and security on EU imports in the late 2022. In the following year the
trade of UK fell tremendously with some effects as follows:
Goods: Even after having stronger restricts on the EU border the imports of UK from EU were
smaller than the exports of EU from UK. In the last quarter of 2021, the imports from EU were
down by approximately 20% compared to 2019 while the exports fell by nearly 10%. The non
EU imports rose by 10% while EU imports were falling, shows a swapping between them.
Services: UK's trade with EU had fallen comparatively with the non EU trade in 2019. It can be
concluded that this fall is because of the Covid-19 pandemic as it majorly affected the travel &
tourism as it provided greater source of revenue to the Europeans than the non-Europeans. UK's
exports have risen by nearly 7% post the transition period while the imports from EU are down
by more than 30%.
The improbable weakness in UK exports to EU compared to imports to EU is due to a
number of factors. Rising prices of energy from non EU countries. Since UK provides a small
market for EU exporters, the people were not convinced enough that it is worth spending on
paperwork to export due to the Brexit. After the transition period it was noticed that around 15%
of the German companies had stopped exporting to UK. Weakness of EU imports was also due
to global supply shortfall, having machinery and transport tool import shortfall of more than half
as compared to 2019. Looking at the overall trade performance, it can be seen that UK has also
shown fall in exports at the beginning of the pandemic which has still not be healed. During the
first wave of covid in 2020 all the advanced economies including Uks economy fell by 20% and
in the fourth quarter of 2021, all the advanced economies trade volumes bounced back to 3%

above but Uks trade volume still remains 12% below the pre pandemic levels. Therefore, we can
conclude that UK is falling behind as a trade intensive economy because the trade in GDP ha
fallen by 12% since 2019. The non-trade barriers of will affect UK more than the EU. The Uks
economy will not be able to revive even if it starts trading with other countries like Australia,
US, India, New Zealand, etc. The impact of the Free Trade Policy with Australia shows an
estimate that it would raise the exports & imports by 0.4% and GDP by 0.1% within a span of 15
years. Two things that pandemic taught us is that diversification of supply is really important and
the location on the map is a major factor, countries usually trades more with their immediate
neighbours. Europe also lost around one-sixth of its global economic power and a loss of its
foreign exchange with the exit of a global influencer. There was a shift of power after Brexit
which means that EU might have to follow a protectionist policy rather than making reforms in
future. The assumption of 15% fall in trade due to Brexit will not be treated as principle estimate.
The exact effects will take several years to be realised.
What are the challenges that are faced by UK for carrying out the business activities?
As per the point of view of David Lowe, Kieran Laird and Bernardine Adkins (2022), every
business organisation has affected due to BREXIT as it has impacted various accepts of business.
It has caused manpower issues as many of the skilled workforce have migrated to their origin
country. Trade got affected by the new norms of the country after the BREXIT. Businesses that
supplies their products within the country got effected by this new trade barrier between the
allied countries. The risk arose due to his factor has increased the supply chain cost and also
increased their cost hikes. It is crucial for the exporters and importers to know the new custom
implications and tax laws which will affected after the BREXIT. There has an enormous impact
on the Economic activities of a country. Every sector of economy has seen effects of BREXIT,
this exist has caused change in the intellectual property law. These new challenges have to face
by the new businesses and existing businesses. This has impacted various sectors of the economy
such as public sector, tech, financial services and real estate.
According to Chris Hunt, Lee Nuttall and Bernardine Adkins, BREXIT have caused a
significant change in the property law and the perspective of the local people that the changes or
positive or negative. The power has been delicate to the state and the possibilities of challenging
a decision of a state is not possible. United Kingdom left the European Union has left UK alone