The European Union : A Political And Economic Union

The EU was created after the Second World War to unite the neighboring countries of Europe. It was established by six European countries in 1951: France, Belgium, Luxembourg, Italy, Netherlands and West Germany (Briney, 2015). Today it consists of 28 countries united to create an economic and political community (Gov.uk, 2014).

The decision of the United Kingdom to leave the European Union has served in reshaping the way politics works in Europe. On June 3rd, 2016 a massive 30 million people came out to vote on the future of their countries. In the end, the vote to leave won 51.9% to 48.1%. Places like England and Wales both voted in favor of the exit, while Scotland and Northern Ireland voted overwhelmingly to stay in. While the long term effects of this decision obviously need time to be observed, the immediate economic impact has been somewhat mixed. The day after the vote was a cause for concern in that “the pound slumped after the referendum - and remains around 10% lower against the dollar and 15% down against the euro” (Wheeler 17). In contrast to this,

Since 1973 when the British first joined the European Union their membership has been a controversial issue. When conservatives in the United Kingdom won the general election in 2015, their election manifesto promised to hold a referendum on whether or not the United Kingdom should stay or leave the European Union. The referendum also referred to as “Brexit” is scheduled to take place by the end of 2017. The United Kingdom initially joined the union to be part of the common market for the purpose of trade and to develop international relationships. The main argument for those who are pro Brexit is that being part of the European Union is too costly for the United Kingdom, that the EU has grown to large, has interfered to far into

The public was bombarded with warnings about how they would be poorer if they voted to leave the EU but, in the end they weren’t convinced by what they were told and/or believed it was a risk worth taking . For the Confederation of British Industry, the International Monetary Fund, the Organization for Economic Cooperation and Development, the Institute for Fiscal Studies, there was an alphabet soup of experts lined up to say economic growth would be hobbled, unemployment would go up, the pound would plummet and British business would be left in a no man’s land outside the EU . Overall, since UK left the EU they will be able to profit more and help their people to get out of unemployment and rebuild their country.

Brexit means that Britain is exiting or voted to leave EU. This can affect businesses in UK in a bad way because those businesses who are buying/importing from the countries who are part of EU will not experience the smooth process and cheap taxes/value of pounds . This is because UK will not experience the perks of being a member of EU anymore if they completely leave.

This report notes that the UK has the possibility of leaving the European Union (EU). The UK as a member of the EU has rights to get some good policies on trade. In the meanwhile, the UK also need to obligate the restrictions of businesses that published by the EU. The UK’s economic has correlation with the EU. Therefore leaving the EU (Brexit) might bring some changes on trade, employment, the regulations of businesses and the position of UK in the world. This report analyzes the positive impacts and negative impacts that might be brought to the businesses in the UK if UK decides to leave the EU.

Perhaps the greatest uncertainty associated with leaving the EU is that no country has ever done it before, so no one can predict the exact result. One of the biggest advantages of the EU is free trade between member nations, making it easier and cheaper for British companies to export their goods to Europe. However some economic researchers believe these savings outweigh the billions of pounds in membership fees Britain would save if it left the EU. The UK would also risk losing some of its negotiation power internationally by leaving the trading bloc, but it would be free to establish trade agreements with non-EU countries.

Although the British voted for leaving European Union, Brexit would adversely affect the British economy in the fields of trading and foreign direct investment.

Specifically, in 2017, the World Bank named the United Kingdom the seventh strongest economy in the world, with projected economic growth of 1.3%, 1.6%, 2.1%, and 2.3% in 2018, 2019, 2020, and 2021, respectively (“Trade Regulations,” 2017; “Economic and Risk Analysis,” n.d.). However, these projections neglect to account for the Brexit transition, where higher growth is expected, as regulations will be rewritten to further support trade and welcome foreign investment, with tariffs sinking as low as 1.6% (Wheeler, 2018). Largely, indicating greater economic growth, more available jobs, and higher rates of disposable

Exports have been affected by global events. Most importantly, “Brexit” added to fears that the European Union is unstable and other countries may follow the UK and leave the union. The EU is a major trade partner of the US and China, which could disrupt global trade. Brexit has caused major volatility in global markets as well. This could trigger consumers to stop spending and save more. Brexit also hiked up the US dollar 6.3% against the British pound. This continues the trend from last year of low exports and revenues in the manufacturing sector further impeding profits and limiting their willingness to invest.

There is no doubt that the ‘brexit’ will have a significant impact on UK, especially for the financial system. In the following few days after referendum, the financial market shows the immediate impact of ‘brexit’, the sterling exchange rate index sharply fallen by 9%, the bank equity price had fallen by 20%, the ten-year UK government bond yield had fallen by 52 basis point. In its latest financial stability report, the Bank of England had identified that the risks around the referendum on the United Kingdom’s membership of the European Union as the most significant near-term domestic risks to financial stability. (‘Financial Stability Report’ Bank of England, 30 July 2016). The following risks around referendum are considered main threaten to UK’s financial stability:

The European Union’s economy, despite being one of the largest in the world; very comparable to the size of the economy of the United States, does not provide a great benefit to the UK. Both the economies of the UK and of the EU are less than ideal for the respective nations, but

With Britain’s vote to no longer remain the EU, its economy could take a dangerous hit and weaken considerably. Emma Charlton and John Robison, journalists for Businessweek, claim that “voting to leave the European Union would dramatically increase the UK’s chances of” (Charlton and Robinson) recession because of the risk that it places on the economy. Their prediction points out how much of a threat leaving is to Britain because of the consequences that it will bring to jobs, growth, and investment. Lukanyo Mnyanda and Lucy Meakin, journalists of Businessweek, point out how parts of Britain’s economy have already been hurt by the decision, with the "[pound] sterling earlier [reaching] $1.3229, the lowest since 1985...[weakening] 6.2 percent to 81.27 pence per euro, for the biggest decline on record" (Mnyanda and Meakin). This decrease in the value of the pound is dangerous because a weaker pound will make UK imports, like clothes and diesel, become more expensive because they require a larger value of pound in order to be

The main global issue that the Brexit has caused global economic growth to decline, and this decline is expected to extend to the long term if things keep going this way. A main reason that this Brexit has caused global economic growth to decline is because Germany and the United Kingdom work closely together, as well as much of other parts of Europe. Because Germany’s automotive industry is very dependent on the United Kingdom. The Brexit is reducing British imports by 12.5 percent which will

Early this year the United Kingdom held a referendum to decide whether to leave or stay apart of the European Union. This event is called the “Brexit” (Britain exiting the European Union), but even though the acronym only includes Britain it means the entirety of the United Kingdom. In the referendum, most of England and Whales voted to leave while Northern Ireland and Scotland voted to stay. Ultimately the United Kingdom’s vote was won in favor of leaving the EU with a 51.9% vote to stay and a 48.1% vote to leave (BBC News). Now the question is what does this mean for the UK and how will this impact its economy in the future? It may be too early to tell how this will play out, but for us to identify what is happening now we must thoroughly and truly understand the reasons for this Brexit in the first place.