Introduction On the 23rd of June 2016, the United Kingdom voted to leave the European Union (EU); an event now commonly dubbed “Brexit”. This decision means that the UK will be the first country to leave the common market that is the EU, where a common market is defined as a “group formed by countries within a geographical area to promote duty free trade and free movement of labour and capital among its members” (What is common market? Definition and meaning, 2017). Trade deals with other countries are organised by the EU on behalf of its member states, as well as the rules and regulations governing business activity within the common market. As a result, leaving the EU is likely to result in huge implications for small to medium sized …show more content…
In the long term, exports are likely to suffer. The EU is the UK’s major trading partner, with 44% of all exports in 2015 heading to the EU (UK trade: Apr 2016, 2016). With the loss of free trade, SME’s in the UK are likely to face higher trading costs, which smaller firms may not be able to afford. Medium sized enterprises may find it difficult to grow as usually firms would try expanding to the EU. This, alongside the downgrade in the UK’s credit rating from AA+ to AA (BBC, 2016), mean that the cost of obtaining finance has increased for SME’s, as commercial banks are often their only way of externally obtaining funds. Furthermore, after Brexit SME’s could lose assistance from the European Investment Bank (EIB) which is organising a £100m lending scheme to SME’s (The Guardian, 2017). This could further drive up the cost of loans as the Central Bank will have to fill in the gap created. However, the downgrade in the credit rating was due to the short-term shock and uncertainty of Brexit (BBC,2016), which means the credit rating could bounce back in the long term. Furthermore, the banks hardest hit by this short-term shock would those banks with “cross-border business models” (Moody’s: Brexit poses manageable credit challenges for UK and EU, 2016). Also,
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The European Union (EU) is a unique economic and political partnership between 28 different countries. It consists of about half a billion citizens, and its combined economy represents about 20 percent of the world’s total economy (Briney, 2015). Today The European Union works as a single market, with free movement of people, goods and services from one country to another. There is a standard system of laws to be followed, and since 1999 many countries share a single currency called the Euro (Europa.eu, 2015). This essay will explore the background history of the European Union and the benefits and drawbacks of the European Union.
The first implication that will impact The business is the European Union, which has been in a deep recession this is because consumer demand has fallen, whilst unemployment rates are increasing across the European union. This has caused great concern to global markets as the possibility that Greece may not be able to pay of their outstanding debts, this could result into the them defaulting the Eurozone, however there is some stability but this situation is very delicate because the European Central Bank and also the International monetary fund, have
With the infamous “Brexit” vote in 2016, the United Kingdom’s (UK) separation from the European Union (EU) was only the start of the union’s eventual downfall. Upon exiting the EU, the UK also chose to leave the EU’s Single Market, causing friction for UK manufacturing firms. The Single Market Strategy removed internal borders and other regulatory obstacles between EU states in regards to trade. The function of the Single Market was to “stimulate competition and trade, improve efficiency, raise quality, and cut prices.” However, with “Brexit”, the UK lost rights to sell to into the European markets without discrimination. Huge tariffs were placed on EU imports that caused financial distress to
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.
The UK as a member of the EU’s single market— a project to remove the barriers of trade within the EU and combine the European
| Economic 1. Downturn in the economy has negatively affected the manufacturing and construction sector – resulting in some clients going out of business, and having implications upon credit insurance 2. The financial system remains vulnerable to setbacks in both the global economic recovery
Investors operating inside Britain, will not have access to the EU Single Market, but would face tariff barriers and higher trade costs. Therefore, the rate of foreign investors investing in Britain would likely decrease. Some businesses currently operating in Britain will choose other countries for their businesses. Many international and national organizations have decided to leave Britain after Brexit, even some of the organizations decided to abandon Britain after the referendum. The New York Times Editorial Board (2017) asserts that “Bank of America had chosen Dublin as its future European Union hub, joining Citigroup and others in making contingency plans for the day when London loses the ‘passporting’ privileges.” Consequently, in addition to negatively affecting the economy of Britain, many British will lose their jobs and job opportunities available for
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.
The effect of the Brexit has already started effecting UK already. It would be a major negative shock to the UK economy, with economic fallout in the rest of the OECD, particularly other European countries. In some respects, Brexit would effect tax on GDP, imposing a persistent and rising cost on the economy that would not be incurred if the UK remained in the EU.
The Government in the UK is relatively stable. We currently have a coalition government as none of the political parties got enough votes to win the majority. Therefore, both of the parties’ manifestos are co-joined so there is a lot more UK businesses need to prepare for. Political decisions can affect businesses
income or GDP (Ottaviano, 2014). A cost of leaving the EU would be the decreased trade between the UK and EU due to the reimplementation of tariff and nontariff barriers such as regulations and border controls. In 2014, 45% of UK exports and 53% of UK imports were attributed to the European Union (ONS, 2015). This level of trade creates lower consumer prices and access to more knowledge and technology, which is beneficial to the UK economy. Therefore, a reduction in trade would be disadvantageous to consumers in the UK, because it would lower their living standards. Furthermore, companies may start wanting trade to be routed through other EU member countries rather than the UK to ensure their access to the single market and to make sure that their business continues
On June 23rd, 2016 the United Kingdom held a referendum that would ultimately decide their economic and global relationships with the European Union, along with the rest of the world. Brexit, the highly known nickname of the phrase “Britain exiting” was vote to spate from their long standing union with the European Union. As a 52% of the UK passed Brexit it began to start controversy on whether they could or should operate by themselves. Immediately following that day, the price of gold spiked up by four percent. Even before the vote, uncertainty had already arose on the future of the European integration process if Brexit would to have been passed. As the outcome stands today, a majority of the UK approved the detachment of the European Union and would now begin to suffer blows to their economy in the short term, medium term and long term. One such impact that came rather quick was the drop in stocks. The exchange rates were a particular hit on large banks of the state. Though those two initial impacts recuperated in a week’s time, interest on government bonds 3 months or older conceived losses that would not be as easy to recover from as argued by Fichtner, Große Steffen, Hachula & Schlaak (2016) “evidence of this can be found in the prices of credit default swaps (CDS) for gilts, which have sharply increased compared to those of German government bonds” (p, 302). Another prediction leads to believe that government financing costs in particular are to rise in the medium
In the aftermath of the 1957 Treaty , the European Economic Community (EEC) was established and customs barriers between the member states have been abolished. Member States throughout the Community, can “promote a harmonious development of economic activities, a continuous and balanced expansion, an increased stability, an accelerated raising of the standard of living and closer relations between them”. Therefore, in order for a common market to be established between Member States, the Community enacted some legislative provisions which aimed to a true harmonization of laws; incorporate different legal systems under a basic legal framework. The main issue arising is whether these legal provisions in accordance with the case law, ensured the free movement of goods within this market.
The European Union (EU) is not a typical international organization. The mix of intergovernmental and supranational institutions makes the EU a unique, distinctive political, and economic system. As Europe has spiraled from one crisis to the next, difficult discussions haves arisen about how much more power should be delegated to Brussels. Even though the EU advocates for “ever closer union”, through increased integration, states are becoming hesitant to relinquish power to the EU. This is due to the fact that state sovereignty has become threatened; it is being compromised by a combination of the lack of effective democratic institutions and the loss of states have lost control of law-making to legislation power to EU institutions. Euroenthuthiasts argue that state sovereignty is enhanced, not threatened, by reallocating power to EU institutions. However, Eurosceptics dispute that too much control has seceded to the EU making is a threat to state sovereignty. My position aligns with Eurosceptics, for the EU has weakened state sovereignty do to increased centralization of power in EU institutions that lack legitimacy. The European Project has obtained a copious amount of jurisdiction from states and eroded a basic fundamental freedom of the modern state- sovereignty. Since the EU has with goals to deepen and widen integration it’s clear that forfeiting state sovereignty will only intensify. My essay will start with a brief history of the European Union and a short
One of the main objectives of the European Union (EU) is the establishment of the internal market, which shall consist of “area without internal frontiers in which the free movement of goods, persons, services and capital is ensured. The internal market is based upon a customs union achieved through the abolition of the imposition of customs duties and charges having an equivalent effect and the prohibition of discriminatory taxes on intra-EU imports. The internal market is enhanced by the provisions on free movement of workers, freedom of establishment, free movement of services, and free movement of capital. Whereas Articles 28 to 30 of the Treaty on the Functioning of the European Union (TFEU) provide for the establishment of an EU common external tariff and the elimination of customs duties, Articles 34 and 35 of the TFEU (with exceptions under Article 36) go further, and prohibit quantitative restrictions and measures having equivalent effect. Taken together, Articles 28 to 32 and 34 to 36 serve to ensure the free movement of goods within the EU and to facilitate the operation of the internal market.