How does Brexit Impact the UK and EU finance industry

Document Type:Dissertation

Subject Area:Finance

Document 1

UK is the fifth largest economy in the world and the decision to quit the union will adversely affect the finance industry. European Union comprise of countries that engage in trading activities with less restrictions. The union also regulates the value of the currencies across the world. For instance, all the currencies are traded in a single platform to prevent inflation. Financial institutions such as banks and insurances will be the most affected because the currency of UK is likely to lose value. Additionally, the quit is likely to have an adverse effect in the stability of European Union. Evidently, UK plays an important role in the formulation of policies and laws that govern activities of the union. The UK has competitive advantage over other countries because of the numerous multinational companies that enhance foreign trade.

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Research questions • What are the advantages of Brexit to the UK? • What are the detriments of Brexit to the UK and EU? • What are the challenges that the financial institutions likely to face after Brexit? • What are the effects of Brexit on the international Trade? • What are the future position of financial institutions after Brexit? • What considerations should UK put in place before making the final decision on Brexit? Significance of the Study and reasons why this topic is relevant This topic gives a wide scope in understanding the effects of Brexit in the UK and EU. I decided to choose this topic because of the wide research involved to unearth the benefits and adverse effects of Brexit. The banks will never receive financial advice and the many banks are at high risk of running at a loss.

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Both the UK and EU regulators are paramount for the development of banking sector (Dao, McGroarty, & Urquhart, 2018). The Brexit will give a room for single market. However, UK will not export financial services into the EU. This decision will adversely influence the European countries because they will not identify the financial markets. For instance, there will restriction of import and exports in the UK. The UK will have to increase the tariffs on the imports and provide tough policies to could govern the foreign trade (Dao, McGroarty, & Urquhart, 2018). The changes in the foreign trade activities adversely affect the financial institutions. For instance, when then volume of imports exceeds that of export, the country will face unfavorable balance of trade. Furthermore, import inflation is likely to arise and affect business activities.

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Currently, the UK has four main platforms that it can use to influence the international financial standards. For instance, as a member of ISSBs, it has the absolute right to defend the interest of UK by taking part in setting the international financial standards. Secondly, the actions of UK could also influence Basel III reforms (Dao, McGroarty, & Urquhart, 2018). It is also worth noting that the UK through legislative actions can protect the interests of UK by influencing how member states should implement the international financial standards. However, after quitting the union, the country will have no powers to influence the activities of international financial standards. All the financial institutions use the passport to access the single market. In this case, all the financial institutions will ascribe to the regulations of the UE (Quaglia, 2018).

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For this reason, the UK companies will not have the authority to trade financial services to the other countries because of lack of passport required to operate in the international financial framework. In addition, the local financial institutions in the UK also enjoy because they can access the single market courtesy of the EU. It is also important to note that the country will access the single market but under the conditions after leaving the union. The video calls and interviews were mainly from employees of multinational companies as well as foreign investors. The research also reviewed the online books and other academic papers to achieve consistency of the information. The researcher also conducted interviews to derive relevant information from people.

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The researcher made good use of social media platforms to interview employees of financial institutions. The respondents answered series of questions that helped to give a proper insight on the role of Brexit in financial institutions. The people that gained from globalization included foreign traders, mobility of labor, standardization of goods and services and finally development of infrastructure and transport system. It worth noting that the listed beneficiaries were not exhausted from the data (Yatsubayashi, 2002). Other sectors that did not benefit from Brexit included healthcare, sports, tourism industry and global peace programs and financial institutions such as banks and insurance companies. Questionnaire also helped in deriving information form relevant parties. The researcher used 75 questionnaires, which were distributed to the respondents. From the above analysis, Brexit has more detriments than benefits.

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