ECO3032 Economics Of Networks And Institutions

Table of Contents

Question:

Objective

The task is to create an intelligent essay that does not include references, graphs, diagrams or figures and addresses one topic in the ongoing Brexit debate in Northern Ireland, the UK and/or the EU.

Answer:

Introduction

“Brexit” is the term used to describe the United Kingdom’s decision to withdraw from European Union.

It stands for the abbreviation for Britain’s exit from the EU.

This study has focused on the economic implications of Brexit for both the United Kingdom and European Union.

Woodford Investment Management was commissioned to conduct capital economics in this context. This study aims to assess the relationship between the United Kingdom and Europe, as well as the impact of Brexit on Britain’s economy.

It was clear that 51.9 percent of the votes cast for Brexit were counted, while the rest voted for the European Union (Barrett et al.

It can be seen that the annual net migration to Europe from 2012 would double and would rise to 183000 by 2015.

This would boost the workforce by 0.5 percent per year.

This would increase the wage rate and inflation rate (Begg & Mushovel 2016,).

According to official trade statistics, half of British goods exports go to the European Union.

If the countries could participate in free trade with the European Union, the trading relationships would be stronger.

Discussion

To discuss the economic relationship between the European Union and the United Kingdom, we need to determine the trading conditions, rates of interest, inflation, and unemployment rates of each market within the European Union.

Dagnis Jensen (2016) claims that the United Kingdom had planned to issue a formal notice of departure from the European Union in March.

The United Kingdom will also offer free trade deals with single European Union markets after Brexit.

Busch (2016) and Matthes (2016) stated that free trade would facilitate negotiation.

De Mars et.al.

De Mars et al. (2016) claimed that it was impossible to reach a free trade agreement with EU countries in this short time.

However, the United Kingdom and companies sell products to consumers in any part of the European Union. This is without the need for consumers to pay additional tax to import the goods.

The goods are also imported from the United Kingdom by British customers and organizations without the need for tariffs.

This means that the European Union also creates agreements to allow free trade between the countries (Kostovicova 2016,).

Although the United Kingdom is likely to negotiate the free-trade agreement, it will be determined by the speed and extent of the business.

The United Kingdom cannot communicate its own trade association with non-member countries because of the European customs Union or the common commercial policy.

However, the free trade agreement between the European Union and the United Kingdom means that 63 percent of Britain’s exports of products are linked to EU membership (Matthews 2015.

The benefits to both sides make it highly probable that the trade agreement will reach after Brexit. This is to maintain the close commercial relationship.

Exporters would be subject to additional costs.

These determinants are still more annoying than major trade barriers.

McGrath (2016) stated that the impact of UK trade on Europe would depend upon the relationship between the UK (and EU) after Brexit.

It should be noted that FTA-based association and regulatory divergence would both focus on the costs of trade to increase over time.

This would also affect bilateral trade quantity as well as the United Kingdom’s position within the European supply chains (Beaumont Walker and Holliday 2016).

It should be noted that the United Kingdom exported PS133 billion worth products to other EU countries in 2015 according to statistical data.

This amount is roughly half the global exports.

However, the United Kingdom can expect to lose PS 4.5B in the coming year if it leaves EU without agreeing to a new trade deal (Purdue Huang and Economics 2015).

Although the EU-UK trade association is unclear, Northern Ireland is in a vulnerable position.

Comparing Northern Ireland to other European Union countries, it is clear that the trade relationship with Northern Ireland has a unique composition and a greater dependency on the republic.

The trading situation of Northern Ireland is very different to the rest of European Union counties.

Simionescu (2016) stated that trade openness can be measured by the ratio of the region’s total trade to the country’s gross domestic product.

This shows that Northern Ireland’s position after Brexit is comparable to England, but higher than Scotland.

The United Kingdom government has announced that it will hold a referendum in 2016 on membership to the European Union (Stosic Mihajlovccc and Zdravkovic 2016, respectively).

It is well-known that Northern Ireland’s trade with the EU is primarily aimed at the textiles, agrifood, and transportation sectors.

The Irish manufacturing sector will see an increase in employment.

After Brexit, retailing and the wholesale sector in Northern Ireland will be developed.

Stosic-Mihajlovccc and Zdravkovic (2016) stated that Northern Ireland’s farmers would have to pay an additional 40 percent tariff and would therefore be affected if they export dairy products.

They are not willing to import milk from the United Kingdom because of the higher import rates.

It can be concluded that the United Kingdom’s money supply would decrease (Simionescu 2016,

The study highlighted the impact of Brexit on businesses in the European Union.

This study shows that Brexit can have a negative effect on EU businesses.

Dhingra and co.

According to Dhingra et al. (2016), businesses in the European Union will be less competitive after Brexit.

This is because the prices of products will rise if the tariffs are increased.

According to the 2015 business analysis, the United Kingdom contributed PS 13 billion towards the European Union Budget.

It can therefore be stated that the annual net contribution to the European Union Budget is around PS 8.5 billion.

Small businesses in the European Kingdom would also be affected.

Beaumont, Walker, and Holliday (2016) stated that revenues for small businesses will decrease.

Due to the fall in pound, the manufacturing sector experienced a growth. Therefore, a weaker pound would not benefit the businesses.

Shah and Mann (2016) stated that small businesses are more susceptible to shocks because their organizational function is smaller.

It can also be noted that smaller businesses face the same problems as large businesses when it comes to getting loans.

According to Economics (2015), Brexit would result in a decrease in profitability.

However, the decrease in the GDP rate reflects the difficulty for smaller companies to import from other countries.

It can be argued, for example, that subsidiary companies would have difficulty maintaining the business.

According to Lim’s statement (2017), the interest rate would drop from 0.5 percent down to 0.25 percent after Brexit.

The European Union countries would be in financial crisis.

This would lead to a rise in the country’s monetary policy.

The countries would also begin a new quantitative ease and buy governmental securities to increase bank lending.

The European Union countries are experiencing a lower unemployment rate, increased consumer spending, and an increase in house prices after Brexit.

Begg (2016) and Mushovel (2016) disagreed. They claimed that 2017 worries are growing because the signs show that Brexit’s vote against the pound has stoked the inflation rate and increased the spending power.

Busch and Matthes (2016) argued the opposite and claimed that the inflation rate will be higher than what economists predicted.

This would increase the standard of life in the country.

In addition, household budgets will be squeezed due to higher prices in the next year.

The unemployment rate will drop and the wage rate will not grow after Britain leaves the European Union.

This means that there would be more employment opportunities after Brexit.

This would lead to a better economic situation for the European Union countries after Brexit.

This would increase the GDP rate.

According to Snaith and Dagnis Jensen (2016), Northern Ireland will be in recession after Brexit.

Accordingly, Northern Ireland’s unemployment rate will rise.

The economists want to increase the country’s social welfare rate.

It can be added that Northern Ireland’s unemployment rate would rise to 7.8 percent after Brexit.

This would mean that the GDP per capita would decrease.

A higher unemployment rate would also lead to a decrease in the wages of employees.

However, Northern Ireland’s inflation rate would decrease from 2011 to 2015.

This rate has fallen from 2.6 percent down to -0.3%.

The inflation rate has declined over the past five years.

It can therefore be said that Northern Ireland will suffer from a deflationary condition.

Kostovicova (2016) stated that the goods’ prices would fall.

The result was a decrease in unemployment.

Matthews (2015) states that a net European Union budget contribution equal to 0.33 percent of the gross domestic products percent would increase trade barriers in the post Brexit period.

This would increase the country’s gross domestic product by 1 percent.

The UK would experience a loss of between 1.5 percent and 9.5 percent depending on the new economic agreements with the European Union (McGrath 2016,).

Because of the spillovers to regional and global markets, this would impact the UK’s GDP.

Conclusion

This study has shown the impact of Brexit on economic relations with European countries as well as Northern Ireland.

This study has highlighted the trade situation of the countries and how Brexit affects their export and import to the European Union and Northern Ireland.

This study revealed that the European Union countries signed a free trade agreement (with the United Kingdom)

This would improve the countries’ trading situation.

In order to trade with the United Kingdom, Northern Ireland farmers had to pay an additional 40% tax.

The Irish farmers would see a decrease in imports of milk products from the United Kingdom.

The unemployment rate in EU countries would decrease after Brexit.

Contrarily, the unemployment rate in Northern Ireland would rise.

The per-wage income of employees would be decreased as a result.

It can also be noted that the rate at which inflation increases from 2011 to 2015 would decrease.

Most important, Northern Ireland is currently in recession.

This would decrease the country’s economic growth.

Refer to

The possible economic consequences of Brexit on Ireland.

48. ESRI Research Series.

Beaumont, P. Walker, L. and Holliday J., 2016.

International child abduction and parental responsibility in the proposed recasting of Brussels IIa Regulation. The effect of Brexit on future child enrapture proceedings.

International Family Law Journal, 4

Begg, I., and Mushovel F., 2016.

The economic impact of Brexit: Jobs, growth, and the state of the economy.

Busch, B. and Matthes J. (2016)

Brexit and its Economic Impact.

Dagnis Jensen (M.) and Snaith (H.), 2016.

When politics wins: The political economy of a Brexit.

Journal of European Public Policy, pp. 1-9.

de Mars, S. Murray, C.R.G. O’Donoghue A., Warwick, B.T. (2016)

Policy Paper: Brexit, Northern Ireland, and Ireland.

Northern Ireland and Ireland (June 1, 2016,).

Dhingra S., Ottaviano G.I. Sampson T. and Reenen J.V. (2016)

The effects of Brexit on UK trade and living standards.

What can we learn from previous political divorces in Europe about the emotional effects of Brexit?

Blog by LSE European Politics and Policy.

The impact of Brexit on tourism and supranational unions: Some insights from a rejoinder.

Current Issues in Tourism, pages 1-5.

The implications of Britain’s exit from the EU on the Irish agrifood sector.

Trinity Economic Papers (215).

Brexit and Possible Implications for Ireland.

Available at SSRN.

Purdue University, D. Huang, H. and Economics N.T.M.A. (2015)

Brexit and its Impact on Ireland’s Economy.

National Treasury Management Agency, Dublin.

Shah, A.M., and Mann, D.L. (2016)

Potential Impact of Brexit on Cardiovascular Translational Science.

The Impact of BREXIT On Foreign Direct Investments in the United Kingdom (No.

Stosic-Mihajlovccc, L., and Zdravkovic I., 2016.

Brexit and Serbia’s economic development

Journal of Process Management.

New Technologies, 4(3). pp.24-29.

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