The aim of this term paper is to present the possible consequences for the United Kingdom after the implementation of the Brexit. First of all, it is dealt with the development of the Brexit over the last three and a half years. Next, the UK's relationship with the rest of the world and its economic situation will be described. Then the possibilities for the United Kingdom to continue using the global economic market after leaving the EU are discussed. Based on these options, the consequences that can result from a Brexit are then discussed. Special attention will be paid to foreign direct investment, as this is of partic-ular importance for the British economy. Finally, the results are summarized in a conclusion.
Table of Content
1. Introduktion Brexit
1.1. Approach
1.2. Timeline of the Brexit
2. National Economy of the United Kingdom
2.1. Economic relationships with the European Union
2.2. Economic situation of the United Kingdom
3. Current options for the economic relations of the United Kingdom
3.1. The Swiss model - bilateral agreements
3.2. The Norwegian model - European Economic Area
4. Economic consequences of the Brexit
4.1. UK trade of goods
4.2. Foreign direct investment in the United Kingdom
4.3. British service sector
5. Conclusion
Objectives and Research Themes
This paper examines the potential economic implications for the United Kingdom following its departure from the European Union, specifically focusing on shifts in trade, foreign direct investment, and the stability of the vital services sector.
- Evolution of the Brexit process and historical timeline.
- Evaluation of post-Brexit economic models (Swiss vs. Norwegian).
- Analysis of trade barriers and goods exchange between the UK and EU.
- Impact of Brexit on foreign direct investment flows into the UK.
- Challenges facing the British financial and services industry.
Excerpt from the Book
4.2. Foreign Direct Investment in the United Kingdom
The loss of the EU internal market would possibly lead to massive restrictions on capital movements as a result of the Brexit, which would cause foreign direct investment in the United Kingdom is suffering. Figure 4 shows that the United Kingdom receives the highest level of foreign direct investment of all EU Member States.
With foreign direct investment amounting to almost 1000 billion British pounds, 59% of this comes from the EU and 33% from the USA. One of the main reasons for the UK's attractiveness as an investment location is its access to the European capital market and the EU single market. Should this access be lost, European and American companies will reconsider future investments in the UK and probably relocate to other EU countries.
This probable development has been confirmed by a study. The study was based on newly opened branches of foreign companies in EU countries for the period 2005-2014 and examined the probability of a foreign company establishing itself in an EU country. As an EU member state, the probability that the choice will fall on Great Britain is 12.7%. If only half of Great Britain has access to the EU internal market, the probability of a branch will fall to 2.9%. As an EU member, Great Britain thus holds the highest value of all EU states. A decline in foreign direct investment could result in a drop in domestic productivity and the associated loss of jobs.
Summary of Chapters
1. Introduktion Brexit: Provides an overview of the referendum results and the official commencement of the withdrawal process.
2. National Economy of the United Kingdom: Describes the historical trade ties with the EU and the economic status of the UK prior to the full implementation of Brexit.
3. Current options for the economic relations of the United Kingdom: Discusses alternative frameworks such as the Swiss bilateral agreements and the Norwegian EEA model.
4. Economic consequences of the Brexit: Analyzes the specific risks regarding goods trade, capital movements, foreign investment, and the vulnerability of the service sector.
5. Conclusion: Summarizes the findings and emphasizes the long-term economic uncertainty and structural disadvantages facing the post-Brexit UK economy.
Keywords
Brexit, United Kingdom, European Union, Internal Market, Trade, Foreign Direct Investment, Service Sector, Customs Union, Economic Growth, Financial Centre, Bilateral Agreements, EEA, Capital Movement, Trade Barriers, GDP
Frequently Asked Questions
What is the core subject of this research paper?
The paper fundamentally addresses the economic repercussions of the United Kingdom leaving the European Union.
Which central themes are analyzed in the document?
The primary themes include the UK’s trade relations, its attractiveness for foreign direct investment, and the specific impact on the financial services industry.
What is the main research objective?
The objective is to identify and assess the economic challenges and potential consequences for the UK after it loses unrestricted access to the EU single market.
What scientific methods were applied?
The author uses a descriptive analysis of economic data, policy comparisons between different models, and a review of existing studies on investment flows and trade patterns.
What is covered in the main body of the work?
The body covers the historical development of Brexit, a comparison of potential future economic models, and detailed sector-specific impacts on trade, investment, and finance.
Which keywords best characterize this research?
Key terms include Brexit, European Internal Market, Foreign Direct Investment, UK Trade, and the British Service Sector.
How might the Norwegian model affect the UK economy compared to no agreement?
The Norwegian model would offer a more stable transition and maintain access to the internal market, although the UK would still need to adopt EU rules and pay contributions without having a say in shaping those regulations.
Why is the financial sector in London particularly at risk?
London relies on the "European banking licence" to conduct business across the EU; the loss of this license could trigger massive job relocations and reduce the City's status as a global financial gateway.
- Quote paper
- Anonym (Author), 2020, Economic Consequences of Brexit, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/953145
