The Effects of Brexit on UKs Trade with EU

Document Type:Thesis

Subject Area:Engineering

Document 1

Brexit will be a complex process with a deadline of two years. The key issues include whether the post-Brexit UK will require revised trade deals with European Union (Andersson et al. The obvious solution is that UK will need that new deal, a requirement that leaves one wondering whether new tariffs will be imposed on goods and services from the UK. This is possible since pre- Brexit UK had an advantage of operating in the tariff-free and the quota-free basis. Another major consideration is the ability and the skills of the UK government to negotiate new trade deals will help the EU (Feenstra). This assumption implies that there is a free movement of factors between countries and from regions of higher earnings to those of lower earnings until an equilibrium point is achieved.

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The other assumptions for this model are that there are no tariffs and all other obstructions to free movement of goods between the countries in the international trade. The factor- price equalization model also presents the effects of the international trade on factor prices of Factors endowments and the Heckscher-Ohlin theory. According to this theory, the major cause of comparative advantage and the international trade is the relative factor abundance or factor endowments. The factor- price equalization concludes that international trade is equivalent to international mobility of factors. The standards of living are also expected to increase (Dhingra et al. Depleted confidence and exchange rate depreciation have been noted since London is no longer a destination for foreign direct investments for European Union.

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Impact of Brexit on European Union Brexit is estimated to bring negative results to both UK and European Union. A survey conducted indicated that some people expect Brexit to bring the further collapse of the European Union, though the majority still feels that the collapse is much unlikely. Depreciation of the Euro is a risk waiting to happen. This hypothesis will be tested using the statistical measures. Methods of data collection A survey was conducted to analyze the expected effects of Brexit on trade patterns between the UK and the European Union. The data collection methods used included the questionnaires and the face to face interviews. The target group included professionals and citizen members of the European Union. The interview question was how Brexit would affect UK's trade pattern with EU.

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However, the inflation rates are expected to rise as demonstrated by the table and the graph below sharply. Year 2010 2011 2012 2013 2014 2015 2016 2017 INFLATION change rate (% change) 142 192 122 110 62. 7 28 29 The effects of Brexit on the exchange rates Since the referendum in June 2016, the value of the currency in the UK has continued to depreciate. The depreciation is partly attributable to Brexit (Gropp, and Reint ). The decline is as a result of expected inferior trading relationships with EU. Other believe that the workers have been affected by the EU immigration. However, even before the Brexit move, there was a section of the economists who considered Europe as economically and politically doomed. The outcomes of this, however, will depend on the strategies of the government and the involved sectors to sign more lucrative trade deals.

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