The Changing Business Environment: Post-Brexit Impact on Trade

This essay analyzes the impact of Brexit on globalization and international trade, questioning the assumption of increasing globalization. It explores how Brexit has challenged these concepts, examining the economic consequences of the UK's departure from the EU. The essay discusses the impa...Read More

Running head: THE CHANGING BUSINESS ENVIRONMENT
The Changing Business Environment
Topic: In a post-Brexit, the assumption of increasing globalization and trade has been called into
question. Explain why this is so, and discuss the implications.
Student’s name:
Name of the university:
Author’s note:

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Table of Contents
Introduction......................................................................................................................................3
Concept of Brexit on global economy.............................................................................................3
Impact of Brexit on globalisation....................................................................................................4
Impact of Brexit on trade and financial services.............................................................................5
Conclusion.......................................................................................................................................6
Reference List..................................................................................................................................7

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Introduction
On 23rd June, Thursday 2016, people of Britain decided to leave EU (European Union) and this
departure of Britain from the UK is termed as ‘Brexit’. The result of Brexit, the value of pound
fell at its lowest level and Prime Minister of Britain Cameron resigned from his post. Britain is
now busy with the rights of EU citizens, Brexit bill and Irish border. Britain wanted the end of
the supremacy of EU over the UK. However, it has impacted some negative impact on the UK
and the rest of the world also. Amidst the hullaballoo, the international trade and idea of
globalisation have faced the major challenges. In this essay, the post-Brexit impact on
globalisation and trade will be evaluated through examples and secondary data sources. This
essay aims to highlight the post-Brexit assumptions on globalisation and trade that are
questionable state right now.
Concept of Brexit on global economy
In the UK, the Brexit victory brought to the UK the loss of its top position in the AAA
credit rating on the June month in 2016. Significantly, the UK had to cut off the interest rate in
order to prevent the recession in the UK. The economy of the UK slipped to degrade as the
marketers got afraid for trade agreements of EU after the UK would leave the EU. The interest
rate was the record low at 0.25% and policy makers feared that disruptive economic fallout
might happen (Dhingra et al. 2014). Now, PM Mrs May wants that Britain must leave the EU as
it is a single market. It is needed that EU's free movement should be stopped. Not only in the
UK, but this also impacted on global economy also. The financial market of macroeconomic can
put consequences on sustained rise of US dollars' value as Euro is getting ahead. Manufacturing
industry will shine and this may put extra pressure on US economy. It is clear that most of the
economic transaction used to happen in the epicentre of EU that is Britain. When this bonding
will break, the capital will be shifted to Asian countries and to U.S. This may lower the interest
rates and may decrease the currency values in the European nations. EU and U.S are two largest
exporters in the world, in case of leaving the UK from EU, value of US dollars will get high
(Nousios et al. 2016). This incident may scare the China in increasing value of Yuan. European
Central Bank will be at risk to cover the risk of premium in Eurozone (Nunez-Ferrer & Rinaldi
2016). Most importantly, Italy will face pressure as each blow of the Brexit will impact on the

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countries of EU. Global growth of economy has not been meeting the forecast since 2014. Last
year this growth was sluggish the most for U.S recession, Brexit and selection of the president of
Donald Trump. In the year the growth of world economy was 2.7% and in the last year of 2016,
this growth was lowest of 2.7%.
However, in case of the UK, the forecast for the economic growth of the UK would be
lower; moreover, the UK economic performance was higher than expectation. World Bank
expects that the world economic growth will expand by 1.3% by the year 2017 as it was
predicted 2.8% before the Brexit occurrence. As stated by Portes & Forte (2017), when the UK
starts to leave the EU regulation, EU will automatically start to gain customers' confidence and
European countries will be flourishing in economic context. In addition, the global economy has
been fragile since 2008-2009. Policymakers are providing a few monetary policies and in this
situation, Brexit pushed it further in terms of global slowdown of economy and recession.
Impact of Brexit on globalisation
Key principles of recent concept of globalisation are included immigration policy and
trade. Brexit can play as pullback to the labour movement, trade openness and globalisation.
However, supporters of UK’s Brexit pointed out the EU's immigration law and that helps to
come more refugees. The influx of refugees to a country reduces the job prospects and it plays
the role to economic block. UK’s Brexit is a protest against the economic model of EU that has
been prevalent for past three years. As employment issue is at stake in most of the Eurozone
countries, they support the anti-globalisation concept. Brexit impacts on Austria and Freedom
Party of Austria creates the boundary on immigration policy (Wadsworth et al. 2016). The Same
scenario is seen in case of Donald Trump as he won the election by supporting blue collared
white Americans' dream. In this regard, the concept of anti-globalisation sentiment pours into the
UK and other European countries. As of now, China has been the most gainer from globalisation
through configuring the perfect set of growth engine. In addition, EU was born from the result of
two world wars and it made the single market and one political union of 28 countries to make an
integration of strong economic and social condition. Globalisation was observed from the
western political leaders’ perspectives; however, individuals now understand the true impact of it
(Irwin, 2016).

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Major borders of the European countries are closed now and all the countries who are
economically developed believe in protectionism (Mendez-Parra et al. 2016). Most of the
Europeans now believe that globalisation has given the advantages to the elite class, not the
common people. The common people think that they should not pay if the banks fall and the
people want the security of nation’s economy. Globalisation curbs the freedom of the people of
their own country and employment posts are not created. Global market economy most of the
time alters with the political decisions and the governments should imply the flexible globalised
economy. Common people are saying ‘no' to the globalised economy as voters are throwing
legitimate grievances to the economic system. The negative steps of growing realisation make
one thing clear that in globalisation most of the times advantages go to the corporations, wealthy
families and educated workers as they can access the capital easily (Wright, 2016). The
maximum population of nations face issue for stagnant wages, staggering debt and job losses.
Income of the people lowers as the globalisation embraces the country and free trade alleviates
this. EU's ability would now be checked as EU could stop the illegal migration from North
Africa and the Middle East. UK's departure from EU will eventually make the EU to inward look
of their procedures and regulations and it would be more defensive in case of globalisation.
Impact of Brexit on trade and financial services
As opined by McCombie & Thirlwall (2016), Britain thought itself to more of a
contributor than the receiver in the EU. The UK gave 350 million pounds to the EU in each week
and they wanted to expense the same in improving the country. European Union is taken for the
world's largest trading zone and breaking relation to the EU may result to the hamper of
international trade for the UK. Britain now needs to make other trade agreements of its own. In
the previous occasion, RU made the trade agreement on behalf of the country involved in the
agreement. EU made them a vow to sign the treaty as the country needs to make a fair trade
following all rules and regulations (Wallstreetsurvivor.com, 2016). Now, breaking the
relationship, The UK will not follow these rules. However, in case of the UK, investors will
consider the UK as less attractive place to business as they will not be following fair trade
agreement (Economics, 2016). As economic condition of Europe is now unstable and it would
make the UK as a less preferred place to trade with as unfair trade agreement may occur.

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The UK cannot decide on tariffs which they levy on importing as before it was judged by
EU and it was uniform for all countries. Now, the UK needs to apply tariffs which are set by the
WTO. Under the EU, The UK had to follow ‘common commercial policy’ as it would not allow
the UK to negotiate over trade agreements. Now, the UK will be able to do the trade agreements
with other people. The UK was the founder member of EFTA and the UK could join it as the UK
was one of the largest exporters (Express.co.uk, 2017). EU treaties give the provision to make a
treaty to the non-EU countries. In case of other members of the EU, Britain could make trade
agreement and cooperation will be observed. EU also will not breach the treaty and EU will not
influence the members to do so.
Conclusion
The global market has been facing the issue of market debt, the economic downturn and
private sector debt. In this scenario, Brexit creates the historical reappraisal of risks in the
political scenario. For European countries, Britain will face a potential loss in financial contexts.
Britain has been facing issues in legal agreements of EU in making a trade. However, now
Britain will be able to make trade with Asian countries. Some argued that the UK may lose the
power in the global market as the non-fair agreement may impact on business. In globalisation
context, Brexit creates has made impact on it as common people understood the globalisation
brings a little sign on countries economy.

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Reference List
Colantone, I. & Stanig, P., (2016). Globalisation and Brexit. VoxEU, 1(1), 32-40
Control Risk (2017). Retrieved 4 September 2017, from https://www.controlrisks.com/en/our-
thinking/analysis/the-global-implications-of-brexit
Dhingra, S., Ottaviano, G., Sampson, T. & Van Reenen, J., (2016). The impact of Brexit on
foreign investment in the UK. BREXIT 2016, 1(1), 24.
Economics, C., (2016). The economic impact of ‘Brexit’. study commissioned by Woodford
Investment Management. 3(3), 23-30
Foster, A. (2017). What is Brexit and what is going to happen now that Britain has voted to
LEAVE the EU?. Express.co.uk. Retrieved 4 September 2017, from
http://www.express.co.uk/news/politics/645667/Brexit-EU-European-Union-
Referendum-David-Cameron-Economic-Impact-UK-EU-exit-leave
Irwin, G., (2016). BREXIT: the impact on the UK and the EU. London: Global Counsel. 2(1),
32-39.
McCombie, J. & Thirlwall, A.P., (2016). Economic growth and the balance-of-payments
constraint. Berlin: Springer.
Mendez-Parra, M., te Velde, D.W. & Winters, L.A., (2016). The impact of the UK's post-Brexit
trade policy on development. International trade journal. 2(1), 43-49
Nousios, P., Overbeek, H. & Tsolakis, A. eds., (2012). Globalisation and European integration:
critical approaches to regional order and international relations. Abingdon: Routledge.
Nunez-Ferrer, J. & Rinaldi, D., (2016). The Impact of Brexit on the EU Budget: A non-
catastrophic event. International Journal of Economics, 3(2), 12-30.
Portes, J. & Forte, G., (2017). The economic impact of Brexit-induced reductions in
migration. Oxford Review of Economic Policy, 33(1), 31-44.

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Survivor, T. (2017). Brexit's Impact on International Trade - Wall Street Survivor Blog. Brexit's
Impact on International Trade - Wall Street Survivor Blog. Retrieved 4 September 2017,
from http://blog.wallstreetsurvivor.com/2016/06/29/brexit-consequences-on-
international-trade/
Wadsworth, J., Dhingra, S., Ottaviano, G. & Van Reenen, J., (2016). Brexit and the Impact of
Immigration on the UK. Centre for Economic Performance. LSE, 34-53.
Wright, S., (2016). Language policy and language planning: From nationalism to globalisation.
Berlin: Springer.
Wright, W., (2016). The Potential Impact of Brexit on European Capital Markets: A Qualitative
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