ffects of Brexit to the UK Economy

350 words | 2 page(s)

Companies leaving the European Union as a result of Brexit will have a significant impact on Britain’s economy. First, the pound will become weaker since some of the investors will shift to other regions (Giles, 2018). A country’s currency increases with the increase in the number of foreign investors in a country. Consequently, household income will be squeezed as a result of the loss of employment for people who were previously employed by the companies moving out. The Gross Domestic Product of the UK will suffer greatly as the economy of the nation will be dragged down. According to Giles (2018), for the last two years, Brexit has dragged the UK’s economy range from one percent of the GDP to two percent.

More companies leaving the UK following Brexit raises uncertainty regarding taxes and policies that govern employment. Such occurrences would lead to a decrease in trading activities, and the national income would consequently decrease. A decrease in the national income would lead to low wages for the citizens and low living standards. The UK will have few resources and will, therefore, be incapable of meeting the needs of the employees in different sectors of economic development.

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Although it is hard to predict what would happen to the companies that will remain, it is probable that they too will suffer from Brexit. The decrease of the national income would lead to high taxation on companies and citizens, and the costs of exportation of goods will rise (Martin, 2018). Given the burden of exportation, the remaining companies would be discouraged from exporting goods, and the pound will therefore fall. Since the economy of Britain is consumer-focused, it will suffer since the citizens will be earning less and, therefore, spend less on non-necessity items (Martin, 2018).

  • Giles, C. (2018, June 24). What are the economic effects of Brexit so far? Retrieved October 4, 2018, from https://www.ft.com/content/dfafc806-762d-11e8-a8c4-408cfba4327c
  • Martin, W. (2018, July 28). Here is What a No Deal Brexit Would Mean for the British Economy. Retrieved October 4, 2018, from https://www.businessinsider.com/no-deal-brexit-impact-uk-economy-2018-7?IR=T

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