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Abstract
Due to the challenges it faced and the differences between the European Union and the United Kingdom, the Brexit process featured a variety of outcomes. The EU was required to show its competence on both an economic and political level to deal with crises of various kinds, but the response provided was not due to any flaws or insufficiencies. This research aims to examine how Brexit affected the British economy and the economic power of the European Union. Both sides experienced positive and negative implications from Brexit, which changed how these two economies impact global politics. Additionally, Brexit had a more significant impact on British businesses than on European ones.
Introduction
Prominent scholars have expressed their respect for the European integration project over the past few decades, describing it as a success story and a vital tenet of the regions stability and prosperity. The economys slow growth, the continued high unemployment rates in several Member States, and the development of populist political parties with Euroskeptic ideologies have all recently put substantial politically and economically influenced measures on the European Union. A pivotal moment in the relations between the United Kingdom and the European Union was the British referendum on being a member of the EU in June 2016.
The objective of this research is to explore how Brexit affected the British economy and the economic strength of the European Union. The beneficial impacts of Brexit are discussed in the second section. To determine if Brexit impacts Europes influence over the global economy and cooperation with other economic powers, section three emphasizes the disadvantages of Brexit on European economic governance. It is necessary to establish effective ties and policies for the future of global economics. This research suggests that Brexit negatively impacted the British economy more than the EU. Compared to the UK, the European Union has more benefits. The European Union has suffered a decrease in economic strength and global economic weight. As we saw from the expert research, Brexit has more negative repercussions than positive points, and the European Unions economy appears to be less damaged than the British side.
Literature Review
Numerous types of research were made on the subject of Brexit, and they present a variety of perspectives on its effects on the economy and on the rules that will guide future interactions between the two sides. The UK government rejected the Schuman Declaration to unify the coal and steel sectors. The country left the Spaak Committee, establishing the future European Economic Community, in November 1955 (Bulmer & Quaglia, 2018). Britain perceived itself as a global force, with Europe serving as essentially one of its domains of influence. Parties have historically been divided, and this has been pushed deeper by Westminsters confrontational politics. British campaign discourse on European integration frequently invokes national and parliamentary autonomy preservation (Leruth et al., 2019). Political elites have rarely had the chance to highlight the advantages of the EU; instead, the EU has often been the subject of debate.
The EUs organizational measures for managing Brexit assisted it in accomplishing its strategic goals in discussions with the UK. Top-ranking EU officials established the EUs objectives before the discussions officially began, notably ensuring the security of the domestic markets. The Member States most impacted by Brexit also immediately articulated their objectives (Guedes et al., 2019). Ireland, in particular, emphasized the difficulties a customs border with Northern Ireland would provide for the islands peace process and pushed hard to ensure that its goals became those of the entire EU (Fabbrini, 2020). To best preserve the European Unions interests against a withdrawing Member, the Eu members coordinated their statements simultaneously. According to Holobiuc (2018), studies estimate that the balance of economic and geopolitical influence shortly may substantially shift, with governments with large populations and strong economies coming out in front. It is unclear in this new environment whether Germany, France, and the United Kingdompowerful nations on the European continentwill fall within the category of significant winners. Given the interdependencies between surrounding countries, the situation is concerning for the continents sustainability.
Some scholars identify other aspects and consequences of Brexit connected with internal markets and economic functioning. According to the study by Liviu (2020), the freedoms of movement and the sectoral regulations responsible for guaranteeing the proper operation of fundamental liberties are just a few of the many policies that make up the internal market. Although the stability of the British pound has not been impacted, the sovereign debt crisis has similarly caused the British governments economic policies to change. It can be seen that no significant changes have occurred in EU trade policy after the referendum by examining how it has responded to this event. The EU has maintained its long-standing stance in favor of increasing liberalization in thought and action.
Findings of Brexit Benefits
The impacts of Brexit on countries economies depend on several factors, including the economic ties between the two sides, the scenarios considered, and the methods employed to estimate losses and profits. Brexit had positive and negative implications, but the data findings suggest that the European Union received more advantages than the United Kingdom. The main benefit is the number of UK companies that now stopped operating a business in the UK to relocate to the EU or transfer services like production there, generating employment and possibilities in nations ranging from Sweden and Greece to Romania and Greece. According to estimates, one in seven enterprises completely ceases operations. Brexits advantages to the European Unions financial industry are yet another matter. Following Brexit, the European Union lost access to the London financial market. Still, it also saw gains in the independence of financial regulation, the prominence of the Paris and Frankfurt financial markets, the homogeneity of the European financial system, and financial stability.
Additionally, the European Union might adopt changes and achieve a higher level of community integration. In comparison to other points, the financial sector has various comparative advantages. For instance, France has 30% of the EUs asset management market, compared to Germanys 16% (Topliceanu1 & orcaru, 2019). Data shows 2,500 asset managers work in Germany compared to 4,400 French workers. However, it asserts that the legal framework in France enables money to be authorized very fast. Moreover, due to Brexit, Paris attracted the most employment from London, totaling 2,800, followed by Frankfurt at roughly 1,800 and Dublin at 1,200. Considering advantages for the British, it is evident that 94% of UK companies that do not deal with the EU are allowed to create their policies by UK authorities. Additionally, it frees up a sizeable sum of money that the UK annually contributes to the Eurozone that could be used to finance facilities aimed at enhancing the UKs future economic potential and promote reindustrialization by fostering key sectors through their early, unknowable stages of development until they advance their unique competitive advantage on the global stage.
Critical Analysis of Brexit Limitations
There are more negative than positive consequences of Brexit on the British economy. Opening with Gross Domestic Product, it indicates that Brexit caused the United Kingdom to lose between £26 and £55 billion, while the European index fell in a range of £12 and £28 billion. Several international organizations and banks forecasted a decrease in the growth pace of the British economy. The UKs percentage of EU-exported and imported goods changed from 2016 to 2022, which is shown in Table 1 (UK Trade Info, n.d.):
Table 1. Trade with EU
The reduction in imports can be observed in 2021; however, the rate decreased instantly throughout the year. By 2021, the UK industry had begun to recover substantially from the coronavirus crisis, which started to decline rapidly in 2022. The British economy is adjusting to various non-tariff restrictions introduced when the Brexit transition period expired on January 1, 2021, according to studies conducted by the Institute for Economic Research.
The productivity of the UK fishing sector is expected to decrease by 30% due to this change toward a more regional economy, and employers have to make complex adaptations. The economys structure as a whole was not substantially altered. However, commercial professional services share of the economy decreased by just 0.3 percent and manufacturings by 0.1 percent.
According to detailed modeling, one of the UK economys worst-hit industries is the production of electronic systems, which is primarily dependent on international supply networks. Contrarily, since it supplies the UK market, food product manufacturing is expected to increase after Brexit.
Conclusion and Policy Recommendations
This research investigates the consequences of Brexit on the British economy and the socioeconomic power of the European Union. Brexit has beneficial and harmful implications for the two economies, changing how the UK and the EU interact with the global economy. Due to Brexit, the United Kingdom faces the possibility of going through internal instability, and there are greater chances for its economy to experience slower development than faster growth.
The Conference on the Future of Europe may be established as a potential approach to resolving the issues. The Conference, which was first proposed by French President Macron and has since received support from all EU institutions and the other Member States, has enormous potential. It might be a fresh approach to the EUs reform, addressing the structural and institutional flaws that recent and historic crises have brought to light. And it may be a ground-breaking move to reinvigorate European integrationchanneling the discussion on the future of Europe that has been going on since Brexit into actual action. On the other side, developing internal policies in the UK can help stabilize the economy through an international partnership with independent companies and organizations.
References
Bulmer, S. & Quaglia, L. (2018) The politics and economics of Brexit, Journal of European Public Policy, 25(8), 1089-1098.
Fabbrini, F. (2020). Brexit and the future of the European Union: The case for constitutional reforms. Oxford University Press.
Guedes, E. F., Ferreira, P., Dionísio, A., & Zebende, G. F. (2019). An econophysics approach to study the effect of the BREXIT referendum on European Union stock markets. Physica A: Statistical Mechanics and Its Applications, 523. 11751182.
Holobiuc, A. M. (2018). The analysis of the economic impact of Brexit on the European Union, Institute for Economic Forecasting Conference Proceedings, 180502, Institute for Economic Forecasting.
Leruth, B., Gänzle, S. & Trondal, J. (2019). Exploring differentiated disintegration in a post-Brexit European Union. Journal of Common Market Studies, 57(5). 1013-1030.
Liviu, G. (2020). The Brexit consequences on the European single market. Juridical Tribune, 10(1). 116-129.
Topliceanu1, S. C & orcaru S. L. (2019). The effects of Brexit on the European Unions economic power and implications on the British economy. AUDR, 15(6), 464-478.
UK Trade Info. (n.d.) Overseas trade. Trade Data.
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