Assignment Sample UCBP5006 International Economics
The consequences of international trade have experienced detrimental changes concerning the export-import operations between the UK and EU as a result of Brexit. In this concern, the present essay will pay attention to critically evaluating the recent implications of Brexit across the trading insides of both the UK and the European Union.
Moreover, a macro environment analysis will be conducted in this context in order to highlight valuable direct and indirect influential factors to the attributes of international trade between the UK and the European Union in the post-Brexit scenario. However, the changes will also be outlined concerning the overall import and export operations and the exchange rates.
Lastly, the response of different business organizations will also be highlighted concerning the changes taking place due to Brexit. A set of recommendations will also be added for the companies to simplify the adoption of changes in the market.
Brexit in Europe has been one of the major changes to international trade and politics in recent times and this has led to changes in terms of the external business environment for several organizations and countries. However, the major reason due to Brexit was the lack of autonomy that the UK had while being a part of the European Union (Bocse, 2020).http://UCBP5006 International Economics
It has been seen that the government of the UK wants to make decisions regarding the UK solely considering their benefits and losses. However, Brexit has allowed such autonomy to the UK; nonetheless, this had led to changes in the trading environment for most of the companies and organizations that are operational.
The countries that are part of the European Union were the largest trading partners of the United Kingdom. About 45% of the UK’s exports and 53% of the imports were targeted toward the rest of the countries that are present in the European Union (Fuller, 2020).http://UCBP5006 International Economics, Therefore, considering the aspects of trade relations between the United Kingdom and the other Nations present in the European Union there might be disruptions and barriers in terms of future trade.
This has not only created growing concern among the manufacturers present in the UK who have their supply chain spread across the entire European Union but also for manufacturers and organizations present in the other European Nations who have an established market in the UK.
Nonetheless, based on the occurrences that took place after Brexit it has been seen that some organizations and entities have achieved a profitable position while some have lost considerable competitiveness in the market. The UK mining industry can be considered as one of the industries that have had a marginal effect due to Brexit as the majority of its operations take place far beyond the UK or the EU (Fuller, 2020). http://UCBP5006 International Economics
Similarly, there are also other industries like the manufacturing sector, which mostly includes aerospace and automobile companies that have suffered a huge loss due to Brexit. Based on the new rules of origin it is essential for organizations to have more than 50% of their source materials to be manufactured locally; however, this does not apply to large manufacturers who have complex products and contain parts that are procured from different parts of the worlds (Broc, 2020).http://UCBP5006 International Economics
Hence, in order to achieve free trade benefits, it would become essential for these organizations to make changes to their import and export regulations so that they can receive the benefits of free trade. Similarly, the financial service industry and the food and agricultural sector operating in the markets of the UK and Europe have also been badly hit due to the occurrence of Brexit.
However, talks between the European nation and the UK have helped in considering some changes and exemptions among which is the agreement of the European Union to add the UK to the list of visa-exempt countries.
This step and agreement taken by the EU are significantly going to benefit the tourism and hospitality industry, as more tourists would be encouraged to travel across Europe due to the exceptions that have been offered on their visas (Ogbinyi Jr and Okereke, 2020).http://UCBP5006 International Economics,
However, the discussions between the UK and EU have had a significant impact on the external business environment for several industries and organizations considering the macro-environmental factors.
The political factors are among the major macro-environmental factors that can affect trade relations between the UK and the European Union and in this regard, it has been seen that the United Kingdom has been maintaining a strong position in terms of the decision-making involved in their country’s favor.
As a result, the European Union has also depicted a lack of flexibility in terms of achieving a better flow of trade involving exports and imports (Battaglia Monterisi, 2021).http://UCBP5006 International Economics Nonetheless, the discussion between both these entities has allowed exemptions in different areas, one of which is the exemption of visas.
Apart from that, in terms of taxes applicable on custom duties in terms of imports and exports have also remained the same after Brexit, which reflects that the discussion between the two entities has helped in marginalizing negative impacts over trade.
However, there are also speculations that the tariffs on trade might fluctuate in the near future. This can have a major impact on the businesses that operate within the UK and have established markets in other countries present in the European Union (Brown et al. 2019).http://UCBP5006 International Economics
The economic factors have also influenced the discussion between the European Union and the UK and considering such economic factors that are present have helped in marginalizing the impacts of Brexit specifically on the UK. Both the
European Union and the UK understand that the occurrence of Brexit may be detrimental to the countries on both sides, therefore, trade relations have been exempted from any kind of extreme measures (Vega et al. 2018). http://UCBP5006 International EconomicsThis has helped businesses operating in the markets of the UK as well as in the European Union that have operations in the UK to operate freely without any extra burden of taxes and tariffs.
Moreover, it has also been mentioned that after Brexit, trade in the UK has recovered and the stocks in the British stock market have subsequently increased. Moreover, in order to improve the economic conditions in the UK, the country has decided to take advantage of the tourism and hospitality industry by charging tourists who are not part of the European Union.
On the other hand, it has also been seen that companies like Vodafone where telecom services did not require any form of roaming before Brexit are now facing the issues linked with roaming services when people from the UK visit other parts of the EU and vice versa.
In terms of the social environment, it has also been seen that the changes occurring in consumer behavior and the difficulties faced by consumers present in the European Union and the UK have influenced the discussion between both these and details (Esmail et al. 2017). http://UCBP5006 International Economics
Data protection has been one of the major concerns for the European unions in the past few years and in this regard, a disadvantage can be faced by individuals living in the United Kingdom, as regulations under GDPR would not be applicable to individuals living in the United Kingdom. However, this does not entirely harm them in terms of their data utilized by various sources, as data protection acts that are part of the UK registration would still be applicable.
Nonetheless, the organizations that are operating in both Europe and UK need to make changes to the data protection policies. In this regard, the awareness among consumers needs to be increased and enhanced. The discussion between UK and EU regarding data protection would have helped in reducing the risk faced by individuals living in the UK (Bergin et al. 2017).http://UCBP5006 International Economics,
However, the discussion between the UK and the EU has provided specific exemptions for tourists and this can help in encouraging the travel of tourists from both these destinations and help in the development of the tourism and hospitality industry on both the sides
As a result of Brexit, a distinct impact can be noticed in the technology sector. For example, the telecommunication sector can be considered. In this concern, UK consumers are being benefited in terms of implementing the existing EU laws in the form of
English law has been adding a greater value to continue to reap the benefits despite having increasing harmonization of the European telecoms market (Norton Rose Fulbright, 2021).http://UCBP5006 International Economics
Apart from that, UK businesses are also kept outside of the European Union’s digital single market strategy. In this context, the UK needs to provide a less restrictive approach to online content services, which might encourage business organizations to launch their offerings in the UK market (Sohns and Wójcik, 2020).http://UCBP5006 International Economics,
However, the export of technological resources from European countries to the UK has been disrupted due to the changing conditions.
Following the occurrence of Brexit, the impact on export has been quite detrimental for the United Kingdom. Based on the reports provided by the office of national statistics it was seen that the export of goods declined by £5.6 billion, while on the other hand, the export of all live animals and food to the other countries in the
European Union collapses considerably by 63.6% (The Guardian, 2021).http://UCBP5006 International Economics This was one of the major downsides of Brexit and the discussions between the European Union and the UK Government can help in reducing such detrimental impacts.
Hence a regulatory body IMF needs to intervene and add the discussion between the UK and the European Union so that trade can effectively occur between both entities.
Not only exports but also imports were also hit by the occurrence of Brexit and in this regard, it can be identified that the imports fell by 28.8% and a loss of £6.6 billion was noticed (The Guardian, 2021).http://UCBP5006 International Economics,
Therefore, not only the business is operating in the markets of the UK due to the occurrence of Brexit but also the countries that had their business operations established in the markets of the UK.
Even though the organizations that operate within the European Union can have other options available, however, the markets of the UK are quite prosperous and therefore the business alignments present in the markets of the UK cannot be ignored by these organizations.
As a result, the intervention from the international monetary fund needs to be initiated so that the export and import fluctuations can be reduced and this would work in the favor of the consumers in the markets of the European Union and the UK (Shapey et al. 2018).http://UCBP5006 International Economics
As changes in export and import occurred after Brexit, the exchange rates were also detrimental head and this resulted in the drop of the pound sterling to Euro by 15%. As a result, the pound sterling has been identified to be crashing after Brexit and this can have a negative impact on the business operating in the markets of the UK.
Moreover, it has also been seen that experts have suggested a financial crisis might occur if the fluctuation in exchange rates continues in a similar manner after Brexit.
The detrimental impact of Brexit on the exchange rate of imports and export can be noticed quite distinctly due to the losses faced by the businesses on both ends and in this regard, several multinational corporations have taken different stances to marginalize the negative impact on their business.
Toyota is one of the most competitive automobile organizations operating in the global market and in this regard, the organization cannot sustain the losses faced due to Brexit. Therefore, the company is constantly trying to identify local opportunities to reduce the losses they have faced after the occurrence of Brexit (World finance, 2021).http://UCBP5006 International Economics
For instance, an automotive organization such as Toyota which previously had the opportunity to procure raw materials from different parts of the world is now restricted to using locally manufactured automotive parts in order to attain the benefits of free trade (World finance, 2021). http://UCBP5006 International Economics
The attitude of the organization has now shifted towards finding a local alternative for previous suppliers in order to reduce their operational costs and utilize the benefits of free trade. The organization has also identified opportunities in the markets of the EU so that the impacts of Brexit do not affect its position and competitiveness in the market (Malik et al. 2019).http://UCBP5006 International Economics
Apart from the Automobile sector, the airline sector has also taken a different attitude in order to marginalize the negative impact of Brexit on their business. Considering the negative impact on investment a decline of 6% has been noticed and this is a major drawback for the airline sector.
Airline organization EasyJet was identified to have a drop of 20% in the share prices after the Brexit; therefore, their attitude towards this political occurrence has been quite negative (World finance, 2021).http://UCBP5006 International Economics The organization is now looking for alternatives in order to recover the losses it faced after Brexit. In this regard, the international monetary fund should take steps so that companies like EasyJet. Moreover, the organization is also looking for investment from other private firms so that it can continue its operations in a smooth manner in the markets UK and EU.
Companies in the airline industry like EasyJet have been further hit due to the covid-19 pandemic as the number of passengers severely declined during this time therefore and investment and financial aid to such organizations are necessary for their survival in the end.
It is also essential for international organizations to understand that the intervention measures that can be adopted by different Nations can help in reducing the negative impacts of Brexit on these organizations for the betterment of consumers in the market (Mohamed et al. 2017).http://UCBP5006 International Economics
The overall essay has highlighted distinct macro-environmental factors impacting business organizations from different industries due to Brexit. In this concern, the international trade attributes are highly impacted concerning relational export and import operations between the European Union and the UK.
However, the detrimental impact of Brexit can also be noticed within the operational consequences of Vodafone and others where the companies are facing different issues during the post-Brexit period.
The export operations had declined to a fair extent as a result of Brexit. Concerning the aforementioned negative aspects, a set of recommendations are provided below to the International monetary fund (IMF).
The IMF should pay attention to undertaking an intermediary role in order to simplify the international trading complexities existing between the European Union and the UK as a result of Brexit. In this concern, common offerings should be offered by the IMF concerning the trade relation’s simplification adjoining the attributes of import and export.
Moreover, common guidelines will also have to be created in this context in order to avoid the market complexity of the business organizations operating across both the UK market and the European market. These measures might add a fair value to reduce the toxic impact of Brexit on the exchange rate and export-import operations for business organizations.
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