The elimination of the “United Kingdom” from the European Union (EU) is terminated as BREXIT. It is a combination of the words- BRitan and EXIT (Brugge et al.., 2016). There was a referendum on June 2016, regarding the EU membership. A majority of the votes were in the favor of withdrawal, hence the complex process of removal started. This withdrawal process brought significant economic as well as political changes in the UK and the whole world (Brugge et al.., 2016). This paper discusses the implications of this separation on the international business environment. The PESTEL analysis is used for clear understanding of the impact.
The decision of Brexit shocked the world economy. The global economy witnessed some major impacts such as the collapse of the stock markets, fall in the British Pound, recession in the British banking sector and others (Brugge et al.., 2016). There would be other consequences of this separation, which are discussed with the help of PESTEL analysis-
There is a high probability of the creation of political instability in the region till indefinite time period. There are already protests from places like Northern Ireland, Scotland and London. The brutal murder of Labor Party MP, Jo Cox displayed the turbulent atmosphere of the UK (Hearse, 2016). The countries in the EU would have a tough time in detaching them from the UK. The Brexit is likely to impact the whole world, including the presidential elections of the United States of the America.
The impact would affect the UK economy and the world economy at large. The economy of the UK would fall by approximately 5 percentage points of the gross domestic product. The financial markets across the globe are already affected (Travers, 2016). The value of Pounds has fallen drastically, which is the lowest in the last 31 years. The share value of the British Banks such as RBS, Barclays, has witnessed a sharp decline (Travers, 2016). The British cities would lose business to their world counterparts like Dublin, Dubai, Frankfurt and others. The UK economy was recovering slowly from the 2008-2009 recession and now with the advent of Brexit, it would have a tough time to get back its strong economic position.
The are a large number of Europeans who are working in the Great Britan. They have high chances of deportation or expulsion from the current organization (Stalford, 2016). This implies an acute shortage of trained manpower in Britain. This might open up new work avenues for the British nationals as well as people from other parts of the world. This should be done carefully as there are increased instances of racial attacks.
There would be negligible growth of Information Technology in the UK (Sharf, 2016). The IT strategies may be discontinued along with a reduction in the imports. This would affect the economies of other countries too. For example, the Indian IT services, export around 18% of their services to the UK. They consider the UK as their second largest market (Sharf, 2016). The UK was also an entry point for the rest of the Europe. The countries need to devise new strategies for gaining access to the European nations.
The contribution of the EU for the environmental matters in the UK is immense (Wallace, Pollack & Young, 2015). It has helped the UK to handle issues such as air pollution, water pollution, protection of the endangered species, protection from dangerous ban, safeguards on the use of genetically modified crops and others (Wallace, Pollack & Young, 2015). The British Government failed to provide a solution to these issues. The Brexit would indicate a turmoil of the matters concerning the environment.
Experts opine that there would be additional complexity as well as duplication in the legal matters as a result of the Brexit. The competition law as well as the merger control works together with the laws of the EU at the present (Jones & Sufrin, 2014). The Brexit would break this coordination and there would be less certainty in the legal status of various agreements. There would also be changes in the trade deal laws of the UK after it separated from the UK.
The Brexit would bring in both positive effects as well as a negative effect on the world economy. There would be changes in the a lot of aspects such as immigration, trade, manufacturing, financial services, regulations, productivity, innovation, foreign investments, public sector and others. This national transformation would change the lives of millions of people.
Brugge, G. S., Perraton, J., Lindstrom, N., Evans, P. M., Lee, S., Quaglia, L., ... & Wilson, S. (2016, June). Britain and Europe: The political economy of ‘Brexit’in trade and finance Workshop at the University of York, 14 June 2016. In Workshop at the University of York.
Hearse, P. (2016). Britain: Right-wing surge fuels Brexit chaos. Green Left Weekly, (1101), 16.
Jones, A., & Sufrin, B. (2014). EU competition law: text, cases, and materials. Oxford University Press (UK).
Sharf, E. (2016). Information exchanges: regulatory changes to the cyber-security industry after Brexit: Making security awareness training work.Computer Fraud & Security, 2016(7), 9-12.
Stalford, H. (2016). The UK referendum on membership of the EU: Whither social welfare and family law?.
Travers, T. (2016). Implications of a Brexit for UK national governance and local government: report of the hearing held on 13th April, 2016.
Wallace, H., Pollack, M. A., & Young, A. R. (Eds.). (2015). Policy-making in the European Union. Oxford University Press, USA.
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