Economics

Impacts of Brexit on globalisation

Introduction

Brexit means British Exit from European Union which indicates that the United Kingdom (UK) supported for prospective withdrawal from the European Union. In 2016, approximately 51.9% of the UK participants voted to leave the European Union for free movement and migrant rights (Cumming and Zahra, 2016). In order to have strong climate change target and no toxic trade deals, the population and economist in the UK voted for exit from the European Union. Through Brexit, they also tried to protect human rights including the rights of the workers in different industries across the nation. Safe environment, sustainable foods, political stability and free movement through international trade are the main advantages of Brexit through which the economists in the UK tried to enhance the GDP growth in the economy. There are great impacts of Brexit on the globalisation of the UK which will be discussed further.

Impacts of Brexit on globalisation

The incident of Brexit has serious impacts on the globalisation where the small firms of the UK are operating with freedom and they try to expand their business across the UK. Previously, the issue was that the small and medium size manufacturing enterprises (SMEs) did not get any opportunity to operate in the market of the UK. As there was appropriate partnership between the EU and UK, there was huge foreign investment and the multinational corporate firms were operating in the market, there were no such opportunities for the small sized manufacturing firm to operate in the market (Cumming and Zahra, 2016). After such incident of Brexit, the small sized firms are getting the opportunity to conduct more research and development and establish their brands in the market (Dhingra, Machin and Overman, 2017).

In the recent years, most of the firms operating in the UK market are SMEs where they are trying continuously to improve their innovation and creativity to operate in the market and gain high market share for securing future sustainable development. Hereby, the incident of Brexit has positive impacts on the SMEs where the small sized firms are getting the scope to show their creativity and achieve competitive advantage in such an era o globalisation. They also enhance the process of globalisation by operating in a large scale of operation and expanding this business across international places. Mainly, the SMEs aim China, India and other Asian countries for exporting their products and services. Moreover, the technological advancement and creativity further enhances globalisation (Statista, 2018a).

The incident of Brexit has adverse impact on the UK economy as there is decreased in international trade, rise in unemployment and high inflation rate in the country.

As per the figure above, there was slowdown in the GDP in the UK in 2016 which was the result of Brexit. In 2017, it has risen as the industries in the UK are trying to cope up with the situation. It is forecasted that, in near future, the GDP is not growing significantly and there will deterioration of the growth rate of the country (Dhingra, Machin and Overman, 2017). In the recent era of globalisation, it has been predicted that, the GDP of the UK will be improved where the corporate firms try to increase their export volume and enhance the performance of the organisation for enhancing globalisation (The Guardian, 2017a).

After Brexit, the UK economy tries to improve their trade performance through increasing the volume of expert so that it can offset the high spending of the consumers in the UK.

After Brexit, the UK economy has the opportunity to protect the domestic industries and encourage the firms operating in the UK to improve their performance so that the export volume can be maximised. Through improving research and development as well as increasing specialisation, leading to lower cost and higher productivity are useful for improving the trade performance of the economy (Los et al., 2017). As per the figure above, the performance of the country in the last year is stable and the firms are trying to improve their contribution to enhance the international trade. Stability in international trade is the result of high performance o the organisations in the UK and the initiatives of the UK government to improve the trade rules and regulations.

The government of the UK took several initiatives such as increasing investment, providing effective training and development program, tax restructuring and investment in education which further enhance the performance of the people. The employees in the UK are also cooperating with the organisations and they are interested in improving their knowledge through more research and development so that it is possible to enhance technological advancement which further promotes globalisation (Dhingra, Machin and Overman, 2017). Specialisation in labour, increasing connectivity with the people foreign investment and cross border actvioities is helpful which indicates that the incident of Brexit does not stop globalisation; it further enhances the chances of becoming more globalised world.

Conclusion

It can be concluded that, Brexit is good for the UK economy where the firms are willing to conduct research and development for improving manufacturing and production as well as enhancing international trade. The UK economy is growing and the industries are improving their efficiency to boost the economic performance by ensuring successful globalisation.

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Reference list

  • Coyle, D., 2016. Brexit and globalisation. Brexit Beckons: Thinking ahead by leading economists, pp.23-39.
  • Cumming, D.J. and Zahra, S.A., 2016. International business and entrepreneurship implications of Brexit. British Journal of Management, 27(4), pp.687-692.
  • Dhingra, S., Machin, S. and Overman, H., 2017. Local economic effects of Brexit. National Institute Economic Review, 242(1), pp.R24-R36.
  • Los, B., McCann, P., Springford, J. and Thissen, M., 2017. The mismatch between local voting and the local economic consequences of Brexit. Regional Studies, 51(5), pp.786-799.
  • Statista, 2018a. Forecasted short-term effects of Brexit on real GDP in the United Kingdom (UK) in 2018-2023. [online] Available at: https://www.statista.com/statistics/567983/effect-of-brexit-on-gdp-in-the-uk/ [Accessed 18 April 2018]
  • Statista, 2018b. Gross domestic product (GDP) in current prices of the United Kingdom (UK) from 2012 to 2022 (in billion U.S. dollars). [online] Available at: https://www.statista.com/statistics/263590/gross-domestic-product-gdp-of-the-united-kingdom/ [Accessed 18 April 2018]
  • The Guardian, 2017a. UK GDP: Britain's economy grew by 0.4% as Brexit slowdown continues - as it happened. [online] Available at: https://www.theguardian.com/business/live/2017/oct/25/uk-gdp-britain-growth-slowdown-brexit-pound-ftse-business-live [Accessed 18 April 2018]
  • The Guardian, 2017b. How has the Brexit vote affected the UK economy? September verdict. [online] Available at: https://www.theguardian.com/business/2017/sep/26/how-has-brexit-vote-affected-uk-economy-september-verdict [Accessed 18 April 2018]
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