Market Entropy: The Effects Of Brexit On The Uk Economy.

Good Essays

Market Entropy: The Effects of Brexit on the UK Economy Entropy, a term that describes the randomness or more importantly lack of predictability of a system, can be applied to the British referendum held on June 23, 2016, on whether to leave the European Union (EU) or to remain a part of it. The lead up to the referendum saw divisive sides formed, those adamant that Brexit would only lead to an economic disaster, and those who viewed a Brexit as an opportunity for economic freedom. The outcome of the referendum, Britain voting to leave the EU, was a shock to many, and has resulted in much speculation on the future of Britain’s economy and as such, the flow of goods. This speculation has resulted in many conversations and predictions …show more content…

4). Under the optimistic scenario the UK will have to pay the EU to remain a part of the EU’s single market, resulting in an increased cost to trade, while under the pessimistic the cost of trade for Britain will increase due to tariffs and increased regulations to get their product into the market. These increased tariffs, and the costs needed to meet regulations hurt the suppliers of goods resulting in a slowdown in the flow of goods and a reduced GDP. Dhingra et. al. uses the estimations of the two scenarios to show a direct correlation between leaving the UK leaving the EU and detrimental impacts to the UK’s economy, and as such the flow of goods. Other economists such as Pierre Boulanger, and George Phillippdis agree with Dhingra’s arguments citing that because the UK left the EU they will make a small GDP gain, yet “this will quickly disappear under conditions of higher assumed trade facilitation costs arising from loss of the single market access” (840). These higher facilitation costs will result in UK producers seeing a decrease of £3.786 billion for agricultural goods and £5.377 billion for non-agricultural producer (Boulanger and Phillippdis 838). The impact of Brexit will be felt the most by producers in the UK economy, especially those who produce non- agricultural

Get Access