The Impact of Brexit on the UK Financial Industry: Research Proposal

This research proposal explores the multifaceted impact of Brexit on the UK financial industry. It begins with an introduction outlining the historical context of Brexit and its potential consequences, particularly for the financial sector. The study aims to investigate the effects of Brexit on the financial sector, examine its impact on trade and financial institutions, and provide recommendations for mitigating negative impacts and utilizing opportunities. A comprehensive literature review examines existing research on Brexit's sectoral effects, including negative impacts on banking and financial sectors, and the potential for challenges in the financial market. The research methodology employs an exploratory study with an interpretivism research philosophy, utilizing secondary qualitative and quantitative data analysis techniques, including thematic analysis. The project plan includes a detailed timetable for research activities, including literature review, data collection, analysis, and report writing. The limitations of the study include the absence of primary data collection and a short study period. The research seeks to provide valuable insights into the challenges and opportunities facing the UK's financial sector in the wake of Brexit.

Running head: RESEARCH PROPOSAL
Research proposal on ' The Impact of Brexit on the UK Financial Industry’
Name of the Student:
Name of the University:
Author note:

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1.0 Introduction
Brexit has been a historic event for both the UK and the European Union (EU) as it
changes the future of the UK and the EU forever. On June 23, 2016, around 52% of people (17.4
million) of the UK voted for Brexit in the referendum and after 3 years, under the leadership of
Boris Johnson (BBC News 2020), the official exit of Britain from the EU occurred in January 31,
2020. However, there is transition period till December 31, 2020, during which Britain will
follow the rules and trading relationships of the EU (James and Quaglia 2019). Brexit is going to
have a highly significant impact on all sectors and all the aspects of the economy of Britain.
Financial industry is one such sector of the economy that controls the monetary system and
money circulation in the economy to keep it running in a manner that achieves growth and
development, and a major economic event like UK exiting the EU will have a deep impact on the
financial industry (Howarth and Quaglia 2017). The banks and other types of financial
institutions that are operating within, from and into the UK are expected to face market volatility
and various challenges with a prolonged uncertainty and the important details are expected to be
settled only towards the very end of the negotiations (Deloitte 2017).
Brexit will make the UK lose access of the single market and customs union of the EU
along with other trade and tariff benefits (Clarke et al. 2017). However, as the negotiation deals
are still going on, the effect of Brexit on the British financial industry is ambiguous. Hence, this
study will explore into the potential impact of Brexit on the British financial industry and based
on the findings, some feasible policy measures will be suggested for the financial sector to deal
with the Brexit effects.

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2.0 Aims/ Objectives/ Research Question/s
The aim of this research study is to explore the effect of Brexit on the financial sector of
the UK and to suggest options for utilizing the opportunities and mitigating the negative impacts
for long term benefit of the economy.
Research objectives:
 To investigate the effects of Brexit on the financial sector of Britain
 To examine the impact of Brexit on the trade and its influence on the financial industry
 To provide recommendations to the finance sector on utilizing opportunities and
overcoming challenges arising due to Brexit
Research questions:
1) What are the effects of Brexit on the finance sector of the UK?
2) How Brexit might affect the trade and trading relationship of the UK as it will lose access
to the single market and customs union of the EU and consequently affect the finical
industry of Britain?
3) What measures can be taken by the British financial institutions to overcome the
challenges occurring from Brexit and achieve growth by efficiently utilizing the
opportunities?
3.0 Literature Review
Brexit has significant implications on all the economic sectors of the UK, however, the
magnitude of effects are different for different sectors, which in turn has implications for the
financial sector. Ramiah, Pham and Moosa (2017) examined sectoral effects of Brexit through

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event study methodology and found in terms of Abnormal Returns (ARs) that the effects have
been negative on the banking, travel and leisure sectors with a cumulative AR of -15.37% for the
financial sector over the period of June and July 2016. Another study conducted by Howarth and
Quaglia (2018) showed that there was little evidence and chances for forming a transnational
coalition or alliances in favor of the UK after Brexit, while the chances were much higher for
neo-mercantilist battle among the member states, led by other major EU27 financial centers and
the nations to lure the financial businesses away from Britain, which would have devastating
effect on Britain’s economy.
Miethe and Pothier (2016) highlighted that London is Europe’s financial capital and the
UK has two major roles in the EU financial system by acting the major hub of the wholesale
banking activities of the large European banks and by acting as the primary entry point of the
non-European capital incoming to the Single Market. By applying event study methodology, the
authors found that if UK loses its financial passport rights after Brexit, UK’s role in the EU’s
financial system would be highly diminished. One potential impact would be that UK has to push
for larger integration with the offshore financial centers under the Crown monarchy, which might
complicate the negotiations between the UK and the EU as that would counter the aggressive tax
planning prevention measures of the EU (Moloney 2016). On the other hand, as the financial
sectors of the world are highly interlinked, the effect on the UK financial industry would have a
subsequent impact on the EU’s as well as global financial market (Belke, Dubova and Osowski
2018).
Studies have been conducted on the potential impact of Brexit on the financial sector,
however, the effect on trade and its impact on the financial institutions have not been studied.
Furthermore, the potential measures that can be adopted by the financial institutions to mitigate

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the negative effects of Brexit have not identified in earlier studies. Thus, this study will focus on
these aspects.
4.0 Research Design/Methodology
The research will be based on an exploratory study based on the nature of the topic.
Interpretivism research philosophy will be applied as the negotiations between the UK and the
EU have not been finalized yet and there is no time series database to examine the trends and
patterns of performance of the financial sector after Brexit (Kumar 2019). This research
philosophy is suitable for qualitative interpretations of the information and events for answering
the research question. By applying the inductive research approach, new insights will be
provided. Since, the type of uncertainty is new and there is no way to text any hypothesis against
established theories hence, deductive research approach will not be suitable for the study (Armat
et al. 2018).
The study will involve secondary data. Hence, to get an overall outlook on the effects,
secondary qualitative as well as quantitative information from research papers, journal articles,
books, news articles etc. will be sourced. Qualitative data analysis technique will be applied on
the data to explore the effects of Brexit on the financial businesses as no numeric dataset is
available for applying statistical and mathematical functions, hence, quantitative method will not
be used (Fletcher 2017). Thematic analysis technique will be followed for choosing relevant
themes under the broad research topic and the findings will be presented accordingly (Terry et al.
2017). Credible sources of data will be used for ensuring data validity and reliability.
The limitations of the study include lack of primary data and short time period. As it is
not possible to determine the appropriate population and sample size because the financial sector

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includes a huge number of businesses, who will be affected in different manners from Brexit,
therefore primary data collection is not possible as well as feasible (Welfens and Baier 2018).
The time period for the study is also less for conducting a survey on the financial industry for
collecting primary data, although the perception of the people will be based on anticipation and
not on facts.
5.0 Project Planning/ Timetable
Task Name Duration Start Finish Predecessors
Research project 116 days Mon 5/4/20 Mon 10/12/20
Designing the
framework 7 days Mon 5/4/20 Tue 5/12/20
Literature review 25 days Wed 5/13/20 Tue 6/16/20 2
Research
methodology 70 days Wed 6/17/20 Tue 9/22/20
Data Collection 60 days Wed 6/17/20 Tue 9/8/20 3
Secondary data
collection 35 days Wed 6/17/20 Tue 8/4/20 3
Creating concepts
for appropriate
research methodology
25 days Wed 8/5/20 Tue 9/8/20 6
Data analysis 10 days Wed 9/9/20 Tue 9/22/20 5
Qualitative
analysis of secondary
data
10 days Wed 9/9/20 Tue 9/22/20 7
Final report 14 days Wed 9/23/20 Mon 10/12/20
Consultation with
professor on final
report
5 days Wed 9/23/20 Tue 9/29/20 9
Thesis submission 9 days Wed 9/30/20 Mon 10/12/20 11
Table 1: Time schedule for the research project
The rows highlighted in color are the milestones for the projects as those are most crucial
for determining the direction of the research study.

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Figure 1: Gantt chart for the project

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References
Armat, M.R., Assarroudi, A., Rad, M., Sharifi, H. and Heydari, A., 2018. Inductive and
deductive: Ambiguous labels in qualitative content analysis. The Qualitative Report, 23(1),
pp.219-221.
BBC News, 2020. A Really Simple Guide To Brexit. [online] BBC News. Available at:
<https://www.bbc.com/news/uk-politics-32810887> [Accessed 13 April 2020].
Belke, A., Dubova, I. and Osowski, T., 2018. Policy uncertainty and international financial
markets: the case of Brexit. Applied Economics, 50(34-35), pp.3752-3770.
Clarke, H.D., Goodwin, M.J., Goodwin, M. and Whiteley, P., 2017. Brexit. Cambridge
University Press.
Deloitte, 2017. Leaving The EU | What Will It Mean For Banking And The Financial Services
Industry?. [pdf] Deloitte. Available at:
<https://www2.deloitte.com/content/dam/Deloitte/cy/Documents/financial-services/
CY_FinancialServices_Brexit_Noexp.pdf> [Accessed 13 April 2020].
Fletcher, A.J., 2017. Applying critical realism in qualitative research: methodology meets
method. International journal of social research methodology, 20(2), pp.181-194.
Howarth, D. and Quaglia, L., 2017. Brexit and the single European financial market. J. Common
Mkt. Stud., 55, p.149.
Howarth, D. and Quaglia, L., 2018. Brexit and the battle for financial services. Journal of
European public policy, 25(8), pp.1118-1136.

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James, S. and Quaglia, L., 2019. Brexit, the city and the contingent power of finance. New
political economy, 24(2), pp.258-271.
Kumar, R., 2019. Research methodology: A step-by-step guide for beginners. Sage Publications
Limited.
Miethe, J. and Pothier, D., 2016. Brexit: What's at Stake for the Financial Sector?. DIW
Economic Bulletin, 6(31), pp.364-372.
Moloney, N., 2016. Financial services, the EU, and Brexit: an uncertain future for the
city?. German Law Journal, 17(S1), pp.75-82.
Ramiah, V., Pham, H.N. and Moosa, I., 2017. The sectoral effects of Brexit on the British
economy: early evidence from the reaction of the stock market. Applied Economics, 49(26),
pp.2508-2514.
Terry, G., Hayfield, N., Clarke, V. and Braun, V., 2017. Thematic analysis. The Sage handbook
of qualitative research in psychology, pp.17-37.
Welfens, P.J. and Baier, F.J., 2018. BREXIT and foreign direct investment: key issues and new
empirical findings. International Journal of Financial Studies, 6(2), p.46.