Brexit refers to the referendum where Britons voted to exit from the European Union and this had implications for both EU and Britain. The essay will explain factor which contribute to Britain exit which includes national autonomy, Britain was paying more and immigration .More over Brexit had more negative impact on the economy of Britain because the UK received the most foreign direct investment and because of Brexit this could lead to disinvestment. Also  the sterling collapsed from 1.50 to 1.33 within hours after early results were announced and stock market crashed .More so the increase in trade cost since Britain have small market which means that Britain will be affected by the tariffs imposed by the EU.

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The main reason for Britain to exit EU was mainly because of the issue of sovereignty which was affecting the total autonomy because Britain did not have control of its own borders because the power was ceded to the cumbersome bureaucracy of the EU. This supported by gylfi at al that the arguments for leaving was centred on immigration and national autonomy[1].This showed that Britain though a member was affected by the regulation of the EU for free movement act which has resulted in cultural hatred between races which therefore explain why Britain exited so that as country it can attain full autonomy of its country. More so other scholars credit the Islamic bombing as a pretext for the loss of sovereignty in Britain which resulted in more people obliged to vote out. Busch et al[2] supported the above argument by stating that public debates are often dominated by political consideration about sovereignty and regulatory autonomy. Therefore one can argue that the issue of sovereignty played a crucial role in the exit situation of UK since Britons could not have total control of borders which mean that people freely move around Britain which was not good and curse for joining the EU.

In addition immigration was the other cause for the Brexit because people migrated to UK even though they were working but this affected the wages of the local citizens which means that the exploitation was now affecting both Britons and immigrates.[3] Gylfi at al state that immigration having a small negative effect on the lowest wages .This means that immigration was now degrading the living standard of the Britons since the falling of wages affected Britons but however some scholars articulates that foreigners did not cause wage falls but contribute to the GDP of the country in a great way. The free movement of people was as result of the EU laws which promote EU citizens to move free and work anyway which means that Britain was a net importer of workers. More so Gylfy[4] at argue that globalisation has benefitted the economy of London more than the rest of the UK and that the brexit vote is a protest by the rest of the country against free trade and free immigration. Therefore one can argue that immigration was important factor for the exit of Britain from the EU.

Furthermore the other fact for leaving the EU was because Britain was contributing more in the EU as compared to other EU members.[5] John Ries stated that Britain was paying more into the EU than it was receiving about ten billion net. This means that Britain did not view its role as being valued in the EU because regulations affected were of great importance at the same time EU regulations were affecting the autonomy of Britain .Therefore one can argue that the exit of Britain was form of a protest against EU to revise its law against Britain.Some scholars  against this view for instance [6]Fasun argues the UK received the most foreign direct investment of any European country and was second only to the united states in terms of the stork of the inward FDI around the world. Therefore this proves that Britain benefited more for being in the EU because much money was invested in Britain and this explains why London was the financial hub of Europe.

More so the implications for the exit EU on the British economy have some negative impacts such as the collapse of the sterling .This means that the exit of Britain affected the economy and currency of Britain which was proved that the exit had some negative consequences on the economy of Britain .According to John Ries [7]the sterling collapsed from 1.50 to 1.33 within hours after the early results were announced. Therefore the collapse of the currency proves that the exit of Britain had a negative effect on the economy of Britain which one can support by the resign of Prime Minister D. Cameroon .Also the weeks after the exit the pound continue to slide which proves the above fact that the exit had a lot of negative impact on Britain and influence the investors who panicked because of the collapse the currency which resulted in market crash.

In addition the other impact for Brexit of UK was the clearly lack of confidence from the foreign direct investors. These risk clearly  involve possible disinvestment as business make contingency to move parts of their business to bases within the European union according to house of common [8].This show that the exit of Britain had large implication on the economy and this will result in Britain lagging behind other economies of the world .Therefore this means that Britons underestimate the foreign direct investment from other countries but in actual this was true and the importance was also minimised .More so the direct investments had helped London to be the financial hub of Europe. People also underestimated the volume of foreign direct investment by other EU countries according to Gyfyl at al[9]. This means that funds for companies in Britain will be limited by the reason that Britain does not have access to the E.U. More so companies will relocate because the market of Britain is small.

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More so the increase of trade cost between Britain and other countries is another impact of exit of UK from the E.U. Also this means that business is now affected in the United Kingdom because the other deal that of America is far away which means trading with USA will be expensive. The increase in trade cost between the United Kingdom and the European following the Brexit can be divided into three categories which includes higher tariffs on imports ,higher on non tariffs and distance according House of Commons [10].Therefore one can argue that the exit of Britain will cost it economically because the tariffs will make British products not have access to the European Countries at the same time it will  cost much to buy. Also this can be explained by the ongoing talks between E.U and British countries to try to avoid such impacts .The UK government has invoked the idea of global Britain where the UK by inter alia establishing new trade agreements arguably would be able to offset of the brexit for the UK economy according J .Ries[11].One can argue that the exit of UK had large negative economic impact on both UK and the E.U countries .These countries also experience a trade decline but to a lesser extent than for UK because the UK market is smaller than that of E.U

In addition some scholars argue that the lowered pound had enabled tourism in UK which means that exit from the E.U had revived the tourism sector but how however this had a negative impact economically because this has raised importation cost of goods .The lowered pound made travel to the UK more affordable thus increasing  tourism , the decreased value of the pound raised imports cost for British citizens according to Gil Turner[12] .Therefore one can argue that exit  of Britain had negative impacts on the economy since the rise of imports will create a in balance trade between Britain and other countries. Dee and Smith see some new opportunities for a UK freed of the constraints of operating within an EU framework in the UN’s diplomatic processes .This scholars defend the above negative impact stating that Britain will actually benefit in future .Also the E.U regulations were continuing to divide the public of UK which was much more dangerous  for the economy and the solution was therefore the Brexit.

Furthermore UK exit from the E.U could result in unemployment since more companies will be forced to relocate from UK to other countries that are E.U member’s .This supported by the lack of confidence of companies who are not sure of the future in UK since market is small and does not have access to E.U countries. Less new investment and the danger of relocation of production could put a dent in employment in the UK according to Daniel Wincott at al[13] .This supported the view of high unemployment in Britain because relocation will affect production output and men power required to produce which result in reduction of the UK GDP. Therefore one can argue that the relocation of companies in UK will affect the industrial growth of UK which results in loss of jobs which is not good for the economy .Also the relocation of companies will not affect the workers only but also banks since companies will not invest in UK which mean that exit of UK from Brexit was not good for the economy per ser.

More so the exit of UK from the E.U had caused financial instability in the British currency which proves that negative impacts dominates the exit plan .The Bank of England, in particular, has warned that Brexit could result in financial instability that could have damaging macroeconomic effects because of the financial openness of the UK[14]. This can be supported by the collapse of the pound just after Britain voted to exit the E.U.The stability of pound now people are not sure whether this will continue or worsen because prior to the exit pound was stable currency more than the U.S dollar. Also the fact that stock market crashed means that the future of UK is uncertain for the whole world and for companies .More so the collapse of the pound has resulted in high cost of imports which mean that the living standard of the UK will drop and companies will not be able to purchase raw material which will result in more people losing jobs.

All in all the causes of the Brexit for UK was dominated by the following facts such as nationalism ,immigration,loss of sovereignty to E.U and UK was the largest contributing member .More so the impact for Brexits includes the relocation of companies, collapse of the pound,stock market crash and lack of confidence from UK banks and Investors .Also disinvestment from Foreign direct investment.

[1] Arnorsson,Zoega,Gylfy  ,On the causes of the Brexit,Cesifo working paper,no.6056,2016

[2] Busch,Berthold,Matthes,Jurgen,:Brexit :The economic Impact-A survey, Cesifo Forum, ISSN 2190-717,Vol.17,Iss.2,p.37,2016

[3] Arnorsson,Zoega,Gylfy  ,On the causes of the Brexit,Cesifo working paper,no.6056,2016

[4] ibid

[5] Http://

[6]F.Fasani  , Refugees and Economic migrants ,Facts ,policies, and Challenges , A ebook,2016


[8] House of Commons (2016),Leaving the EU, Research paper 13/42,1 July 2016

[9] Arnorsson,Zoega,Gylfy  ,On the causes of the Brexit,Cesifo working paper,no.6056,2016

[10] House of Commons (2016),Leaving the EU, Research paper 13/42,1 July 2016


[12] https//:perma.cc556w-7pmv

[13] Daniel Wincott,John Peterson and Alan Convery,Introduction: Studing Brexit causes and consequences,The British Journal of politics and International relations,  vol .19,p.431,2017


Cite this article as: William Anderson (Schoolworkhelper Editorial Team), "The causes and impact of Brexit on the British Economy," in SchoolWorkHelper, 2019,
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