Britain Leaving the European Union - Case Study Example

POLITICAL SCIENCE Name: Course: Tutor: University: Date: Introduction. Brexit is an abbreviation of the term “British exit” it refers to the chances of Britain leaving the European Union. (Nandi, 2016). By this Britain withdraws its membership completely from the EU. Various senior government personnel’s were against the move of Britain leaving whereas some were supporting it to the fullest. Among the ; high-ranking officials who were for the move include London mayor Boris Johnson, president of Russia Vladimir Putin, justice secretary of the UK Michael Gove among others. Those who were opposing the move by Britain comprised of David Cameron who represents the Britain as the prime minister, Barack Obama who is the president of the united states, George Osborne who is the former chancellor of the exchequer heading Britain, Mark Carney who is the Governor Bank of England just but to mention a few. Due to the indifferences on whether Britain should exit or not, a referendum held on June 23rd, 2016. This is to help come up with a uniform and unison voice about the move. The people of Britain exercised their democratic right by voting and in the close of the ballot counting; Britain officially withdrew herself through the voice of the majority expressed by the ballot. This is where the term “Brexit” got coined. Content Brexit move attracted mixed reactions from various heads of state and citizens of Britain. The action for withdrawal accompanied by different economic implications raising the question is it a good step to the United Kingdom or not. Based on the impacts to the economy, a conclusion is quickly settled on. Brexit has affected various sectors of the economy in different ways as explained below. I. Trade and manufacturing industry Here the impact of Brexit on the United Kingdom international trade is looked into depth. Various instances are analyzed. They include trading relationships that may arise from Brexit, effect and impact of no post-Brexit trade agreements on trade in different areas, and finally, the price to be paid for leaving a single market. Active trading relationships are likely to arise since not only is the European Union very important to the United Kingdom market but also, British markets are important to the rest of the European Union. Due to the existence of trade interdependence between the United Kingdom and the European Union, there is little of hostile business to be seen between them. In instances of worst scenarios of no post-Brexit trade agreements (Lea, 2016).The losses for British commerce and exports to the European Union will not be disastrous. British exports get subjected to world trade organization options. This gives Britain an offer of the same tariff on its exports. This is similar to European Union charges to other countries which are not her members. This makes the United Kingdom face no discrimination. The cost of leaving a single market does not affect Britain as it can decide to be part of the single market still despite its exit from the European Union. This is achieved by joining the membership of the European economic area. Primary challenge stands to be that despite it left the European Union so as to be free and independent, it is not necessarily the case. This is because some part of the United Kingdom influence over the European Union is lost. On the other hand, joining the Swiss who are part of the European Free Trade Association but not the European Economic Area, they will be subjected to tense negotiations. II. Foreign investment Brexit is likely to pose an impact on foreign direct investment into the United Kingdom, as the mother companies that have in the cost benefitted from the zero tariffs environment are most likely to close business, as inflows from foreign direct investments shall have dried up (Dagnis Jensen, and Snaith, 2016). They may even end up relocating their production businesses to other countries. Since foreign multinational companies are productive and also bring technological advancement along with them, the closing of shops in Britain poses a long-term threat to the country, having a great impact on manufacturing industries investments that in turn derails the country economic potential. III. Immigration. Immigration volumes from Europe having more than doubled in the past years since 2012, it has led to the growth of the workforce. This has facilitated the growth of the economy without necessarily increasing the wage growth or inflation. This has, in turn, put control of interest rates at a lower rate over an extended period. Brexit implementations mean imposing restrictions on low-skilled workers and attention shifts to only high skilled laborers (Katwala, Rutter, and Ballinger, 2016). The restriction is a blow to the low-wage sectors heavily relying on migrants for labor for example agriculture. This, in turn, affects the economy in a more negative way. IV. Public sector. A keen observation is maintained on the impact of Brexit on public finances of Brexit directly saves Britain public money to the tune of £10 billion annually. This has reduced public borrowing by Britain. One-seventh. Despite this, United Kingdom still may be forced to contribute to the European Union budget (Policy, Politics, and Developments, 2016). This is for it to be incorporated in the European industrial area since the likes of Norway make financial contributions too. Though it is solely based on the size of its economy. Speculations are that it will be relatively cheaper to pay for the Norway-style arrangement. Secondly, the United Kingdom upon leaving the European Economic Area, it may be forced to compensate if at all no free trade union is agreed upon the European Union decides to impose its common external tariffs. The government will find itself in a fixed situation that it has to fully compensate the other business for having lost access to the European Union structural funds like European Regional Development Funds. Thirdly the chances of Britain getting back the revenues lost to the European Union is minimal if at all the United Kingdom still presses on negotiating for duty arrangements that are weak in nature with other countries by use of the new trade agreements. As much as this will be targeted to improve the economy, in the long run, it still costs lots of public finances. Lastly, public finance has possibilities of being affected in the case of Brexit leading to low migration. European immigrants who made their way to Britain made enormous contributions to the public finances. There are chances that in a little net immigration scenario, the contributions shall have reduced drastically and the debt to gross domestic product ratio will be way much higher in a couple of years to come. V. Consumption and property market Britain is losing permission to access free single market this damages the country's reputation as the gateway to Europe. Demand from overseas buyer significantly influences the market as it accounts for nearly the transactions of the British commercial property market over the past several years. Brexit equally poses harm to the city of London as it may end up forcing institutions to relocate to the continent. (Pabst, 2016). This increases the vacancy rate, and the London office space stands a risk of shrinking. This creates a dent in occupier demand. The overall effect and impact is the drop in the value of rentals and increase in the rate of vacancy. This is not favorable to the growth of the economy. VI. Financial services and the city. Brexit poses a threat to the financial service export. (Springford and Whyte, 2014). This is because; it has the magnitude of making Britain lose its "passport" rights. The overall effect of this is that it makes banks restricted to the setting up of brass plate subsidiaries in the European unions. This makes the United Kingdom lose significant amounts of business to the European Union. Based on the above, the financial export to the European Union is stringy hit by Brexit VII. Regulation, innovation, and production Focuses on the impact of, Brexit on United The control of its environment to be considered. Regarding production, British manufacturers are likely to face difficulty in exportation in serious European markets (Ahar Clement, 2016). This makes it difficult for productivity to take place. An immigration policy that only allowed the United Kingdom to only chose workers with higher skills; enable an environment with more productive workers. Brexit seems to have a lighter impact on the productivity of Britain. The main areas that allow improvement come from the field of business development that shows no link to the political situations. Conclusion Based on the findings of the impacts that Brexit has to the economy, the various measure needs to be adopted to prevent extreme deterioration of the economy of Britain. The adverse effects are weighing heavier than the positive, qualifies a vote for not being the best thing and choice for the United Kingdom. In summary, it has spread its effects to various sectors of the economy namely, immigration, trade and manufacturing industry, foreign investments, regulation innovation and production, financial services and the City and consumption and quality market. References Nandi, D., 2016. Brexit, European Union [Eu] and Their Impact on Indian Markets. International Education and Research Journal, 2(7). Lea, R., 2016. Post-Brexit trading options for the UK. Arbuthnot Banking Group, 4. Dagnis Jensen, M., and Snaith, H., 2016. When politics prevails: the political economy of a Brexit. Journal of European Public Policy, pp.1-9. Katwala, S., Rutter, J. and Ballinger, S., 2016. What next after Brexit? POLICY, E., POLITICS, C. and DEVELOPMENTS, N., 2016. Fuel for thought May–late June 2016: UK Brexit (All dates refer to 2016 unless stated otherwise). Energy & Environment, 27(5), pp.597-676. Minford, P., Gupta, S., Le, V.P.M., Mahambare, V. and Xu, Y., 2015. Should Britain leave the EU? An economic analysis of a troubled relationship. Edward Elgar Publishing. Pabst, A., 2016. Brexit, Post-liberalism, and the Politics of Paradox. Telos, 176, pp.189-201. Springford, J. and Whyte, P., 2014. The consequences of Brexit for the City of London. Centre for European Reform. Ahar Clement, U., 2016. Hyper Democracy, Discombobulation: The United Kingdom Brexit: It is Implication for Capitalism. Global Journal of Human-Social Science Research, 16(2). Read More