The beginning of Europe merging into one power was that of Winston Churchill and dates back to as early as 1946 when he in a speech to youngsters in Zurich spoke of the need of a united Europe for the security, peace, and freedom of the land. The dream moved closer to reality when the Council of Europe was formed in 1949 with ten countries: Belgium, Denmark, France, Ireland, Italy, Luxembourg, the Netherlands, Norway, Sweden and the United Kingdom with the objective of fostering the values of freedom, peace, and democracy across Europe (Staab, 2013). In 1957, Belgium, France, Italy, Luxembourg, the Netherlands and West Germany became signatories to a treaty that led to the formation of the European Economic Community (EEC). This led to the formation of a single trade and commerce entity where all barriers were eliminated and thus became what was called as the "common market". In 1958, the Court of Justice of the European Communities was assigned the complete onus of maintaining law and order through European law across the European Coal and Steel Community, the European Atomic Energy Community and the European Economic Community.
However, Britain becomes part of the EEC from 1972. Edward Heath signs the Treaty of Accession in Brussels on January 22, 1972, finally granting permission to Britain to be a part of the EEC (Dedman, 2010). The domestic rivals of the then economic superpower asked that the final decision is made through a referendum. AS Charles De Gaulle resigned in 1969, the tides turned in favour of Britain and the country was finally granted membership in 1973 along with Ireland and Denmark who had applied for membership almost ten years before. Still, their stay was short-lived since a referendum came up in 1975 regarding Britain's membership in the common market. The electorate indicated strong support for membership to the significant support for European Economic Community membership, with 67% in favour on a 65% turnout. Harold Wilson's cabinet had divided choices on the subject while the Times were strongly in favour of the country staying back in the EEC over the issue. In 1984 Margaret Thatcher was successful in getting a budget cut for the UK which worked out to around 66 per cent of Britain's net contribution to the EU budget. (Anon., 2016). Bulgaria and Romania join the EU in 2007 and the total number of nations became 27. There was not too much activity in the years that followed until Britain came up with the referendum to exit from the European Union in 2016. Hatzigeorgiou & Lodefalk (2016) stated that the European Union is always known for operating a single market for allowing the favourable or free-market deal between the member countries. The purpose of the common or single market is to give the scope of free movement of services, capital, commodity and human resources among the member country.
The Common Market:
By 1950’s it was quite obvious that the economic supremacy that Europe had enjoyed till then was slowly starting to fade away. Though there were no visible fights the European nations were politically isolated and economically segregated through trade laws that were fast becoming obsolete. There was growing resentment between the economic powerhouses Germany and France which in turn led to further widening economic gaps in Europe. This brought about a common opinion amongst the governments that economic integration of the countries would be the solution to rejuvenating the ailing economy as well as to prevent the threat of war which was zooming over antagonistic European nations. One strong move in this direction was the formation of the European Coal and Steel Community (ECSC), which integrated the coal and steel industries of Germany and France (Anon., 2014). They set up several regulatory bodies to govern the ECSC and soon three more countries joined the cartel. This was the foundation for the single or common market.
This was followed by six other European countries forming a similar consortium called as the European Atomic Energy Community (Euratom) which aimed at the peaceful emancipation of the nuclear resources of the continent for common good. Slowly this led to the formation of the European Economic Community which was primarily a forum to integrate economics across countries in Europe so that their cohesive power could balance the abnormalities that each individual economy had. A regulatory framework was designed on the norms that member countries were supposed to follow in their trade relations with non-member countries. Thus there was free movement of human resources as well as finance between the various member nations of the European Union and gradually trade and commerce picked up. The EEC, the ECSC, and Euratom had a single council of ministers, representative assembly, and the court of justice and eventually the three completely merged to form the European Community (EC) and the nations which were members of the three organisation automatically became members of the EC (Pauzaite & Baryniene, 2014).
In particular, the purpose of the common market is to establish the appropriate platform for economic integration and political integration with the member countries. The European Union incorporated for empowering the trade, commerce and politics between the member countries. The common market had given the massive scale to small scale industries of member countries. Since 2000, entrepreneurship and small-scale enterprises has risen up to massive scale because of availability of demand, capital, and resources in the common market. The common market has emerged as a forum where multiple nations are integrated economically and commercially through the removal of all barriers to community trade within and between member nations. When the European Economic Community was established the member states took initiatives to remove all import and export duties for trade between member states. Businesses started facing challenges from increased cross-border competition as trade barriers were removed (Hodson, 2011). Imports and exports became cheaper and this made businesses start erecting other barriers to restrict competition like technical barriers.
The primary purpose of the common market is to empower the business of small-scale enterprises and entrepreneurship among the member countries. For the development of economic and political areas, every member countries provide membership and taxation fee to the European Union. This Union fixed the free trade zone, common market structure and Export- Import policy. Taxation or business law is also influenced by the European Union. Since 2008, there is massive risen in small scale industries and entrepreneurship across UK market. Somehow as a leading member of the European Union, the UK provides financial and political assistance to the needy country. In the year 2016, UK left the European Union (Dedman, 2010).
Advantages and Disadvantages for businesses in a single market system
The single market system has provided massive opportunities to small-scale enterprises and entrepreneurship of European Union countries. Common tariff policy has empowered the business of European financial and nonfinancial institution. The European Union is a customs union where trade blocks have been removed for member nations thereby enabling them to freely exchange goods and services. The Union has set up common tariffs for non-member countries and each of the member countries needs to impose the same tariff for imports from these countries (Anon., 2010). This makes it a level playing field for all countries as well as for businesses based out of these countries. Brown Jr (2016) opined that the European Union countries have benefited from common legislative and economic policy. The banking or other financial institutions of member countries follow common business and the legal law of European Union. Somewhere common market has helped this financial institution to maintain the profitability and credibility across the single market. Tariff policy has empowered the business of small enterprises and large scale enterprises because entrepreneurs and businessmen are free to operate the business in member countries.
Free Trade Zone:
The single market has maximised the business and economic opportunity to the member countries of European Union. It has provided flexibility and export and import to the member countries. Especially financial institutions are enjoying perfect market position across the single market. The single market situation has its own share of problems and advantages in comparison to free trade zone. Research indicates that there was the significant increase in the trade of products in the single market in comparison to a free trade zone while services indicated only a lower increase. The tax rate is common in the single market so as small scale enterprises and entrepreneurs are investing the money. Institute of fiscal studies quoted that single market system has promoted the entrepreneurship and start-ups. Free trade zone has promoted the banking, IT, telecommunication, retail, and transportation business across the European Union member countries. A report from OECD which looked at the countries in the single market indicated that the trade in products was 60 percent higher if trading was undertaken in accordance with the GATT agreement by the World Trade Organisation (Hodson, 2011).
Barriers for Non – Member Countries:
Non- member countries have not able to generate the profitability and credibility of business across European Union member countries. Indeed, the single market system is based on a development of economic, trade and political integration between member countries. Taxation and economic policy for the non-member countries is complex as compared to member countries of European Union. Due to the high tax rate and government's intervention non-member countries could not able to diversify their business. The treaty is strong enough to completely restrict the products and services from those countries from even a back door entry to the single market (Staab, 2013). This may not make a significant difference to conglomerates. It is effective enough to say that single market system restrict the foreign direct investment. Small home-grown businesses that are within the single market stand to benefit from the regulation especially if they operate in niche sectors (Anon., n.d.; et.al, 2016). However, SME’s from non-member countries can never make a foray into the single market and even if they do it may be a highly expensive and cumbersome task.
Barriers to Exit:
Matthews (2016) stated that the National institute of economic and social research has found that exit procedure forms the European Union are complex as compared the entry procedure. Recently England faced heavy restrictions and criticism from member countries while making exit decision from the European Union. Exit from the European Union creates poor economic and political relationship with the member countries. England's economic and political relationship between member countries affected after making Brexit decision. The European Union now functions on a set of regulations which can change over time. Once a member exits from the Union and there is a change of regulation in the Union it becomes difficult for them to match with what the EU mandates.
Full membership of the single market guarantees that products which go into those countries do not require inspection prior to entry. On the other hand, exit from a single market generated monopolies which can cost market failure. Manufacturing and supply chain process of non-member countries faces massive restriction and instruction in the border area of member countries. Only member counties are eligible and effective enough to operate the business across single market without having restriction and appropriate inspection. On a practical level, without full membership of the single market and mutual recognition of standards, companies might face border inspections. Compliance may also be a critical issue when it comes to approvals and government go-ahead (Mugarura, 2016). Institute for Fiscal Studies has found that full membership procedure provides an economic and political edge over non-member countries across the single market. It pushes the companies to change their business and marketing policy in the single market. This can also cause delays in the time to market and in the case of manufacturers who are part of the supply chain of other products in the EU the delay may be extremely costly (Mugarura, 2016)
UK with EU – General
There were undercurrents in the single market system from the moment the United Kingdom decided to become a member. All member nations including powerhouses like France and Germany were apprehensive of the United Kingdom being omnipotent in the system and did not favour its entry into the common market. However, they got a membership and even sailed past a referendum in 1975 (Shaw, et al., 1999). The concept of the single market was initially conceived by the British statesman Winston Churchill as a solution to the economic crisis that was slowly weaning the economic supremacy that it had during the early years of the century. The former Prime Minister David Cameron played a key role in leaving the European Union. For restricting the entry of migrants and empowering the economic growth of the country the UK decided to leave the European Union. Brexit factor affects the global market, as a result, every single share market got slashed on exit day. The British government does not want to share the taxation money and income with the member of European Union. The decreasing value of Euro and immigration has pushed the UK government to take the decision on Brixit. Shrinking GDP growth of European Union has also pushed the UK to leave European Union because when UK joined EEC in 1973, the current 28 members were enjoying 38 % of the world economy. Nowadays it is 17 % and falling on the daily basis. The UK is the favourite destination for immigrants from all over the world. It has the created rush in the field of education, business sector and non-business sectors.
Impact of single market on the Economy of UK:
Benefits from removal of trade barriers:
The United Kingdom enjoyed a lot of financial benefits when it was part of the single market system and a large proportion of these benefits also trickled down to entrepreneurs. The UK Treasury statistics indicate that the EU's internal market system provided four kinds of freedom which were beneficial to businesses as a whole –customs union, four freedoms of movement, and removal of non-tariff barriers (David Myddleton, 2013). These have increased the trade between EU members by 38 percent of GDP (Anon., 2015). The UK has managed to diversify the business across the member countries of European Union in last decades. Due to common economic policy and taxation policy UK, based enterprise entered into the single market for maximising their profit position created by the EU. Somehow income or profit generated from a single market system by the UK-based companies provide tax share to the European Union. It has become the key reasons to exit from the European Union by the UK in 2016. The UK government wants to remain the tax and business income their country instead of sharing with the European Union.
Economic Growth from being a part of EU:
Being a part of the European Union has opened up to the region, one of the world's richest markets comprising of roughly 500 million people who churn out revenue to the tune of £10 trillion. More than 50 percent of the revenues that the UK generates from trade are from the relationship with the European Union (Anon., 2015). These have in turn created around 3.5 million jobs in the UK are linked to the export of goods and services to the EU. The Single Market can be credited the complete responsibility for economic growth in the UK and in Europe (The economic consequences of leaving the EU, 2014). The presence of the single market system has doubled the trade between the member nations which has caused income increase between 2% and 6 % in the UK which is estimated at £1100 and £3300 a year per British household (Anon., 2015). Institute of Fiscal Studies has mentioned in the research that UK's GDP in last two years has slashed because of rising competition and decreasing the prices of raw materials. Before 2016, UK's annual transfer to the European Union was around £18billion annually. The UK provides £7 billion to the European Union as membership fees which are less than half percent of total national income. Rising European Union budget has pushed the UK to make Brexit decision. Some of the benefits include better transportation infrastructure and cheaper networks; mutually accepted standards of operation; and easier access to cheap and competitive inputs for British manufacturing companies.
Stability and growth of UK market are depending upon the norms of the single market system and international market factors. Labour Market has become unstable after exiting from the European Union. In 2015, the unemployment rate was around 5.1%. Instability in small scale industries and middle-sized industries has affected the labour market in the year 2015. Changing skill profile of the workers is also influencing the labour market as per the survey issued by The Telegraph. The UK workforce is known as highly skilled in management, technology, and corporate behaviour. Somehow migrated workforces have pushed the UK to modify the economic policy. Uttley & Wilkinson (2016) Mentioned that the migrated workers from India, Bangladesh, and other south Asian countries are effectively available in the UK. Due to cheap labour they are effective for the manufacturing and construction industries. On the other hand, migrated workers have affected the locals of England in last 10 years. There are no minimum wage criteria mandated by the single market. On the other hand, there is a common regulatory framework for land, air and water and their protection which works in favour of businesses since it helps to reduce one of their biggest spending which is environmental compliance (Chiara Giovannini, 2015).
Gross Domestic Products (GDP):
National Institute of Economic and Social Research has predicted that Gross Domestic Product, real wages, and household consumption will face the failure after exiting from the European Union. The NIES quoted that GDP will face the loss up to 1.9 to 7.8 percent by the year 2030. The GDP of UK in the year was around the worth of 2848.76 billion US dollars in the year 2015. GDP in the UK shares 4.5 percent in the world economy. The GDP in the UK averaged around 1081 USD Billion from 1960 to 2015, meanwhile, the year 2014 was all time highest GDP growth generating year with 2990.20 USD billion. In 2014, UK emerged as world's 4th largest entrepreneurial economy. Entrepreneurship business has become the biggest strength of the UK economy. Since 2009 entrepreneurship business has risen and influenced the economy of the country in a positive manner. Hatzigeorgiou & Lodefalk (2016) stated that the UK government always promotes entrepreneurship and small-scale industry for maintaining the growth of economy across the world. The primary reason for most member countries wishing to be part of the single market system in Europe is because of the growth in trade that it has facilitated. Within the UK it has been seen that services are the dominant contributor to the GDP. While service businesses constitute 70 percent of Europe's employment and total GDP in just the UK alone it contributes to roughly 80 percent of the economy (Chiara Giovannini, 2015).
Impact of single market on SME's in the UK:
The single market has empowered the scope of small scale industry across the UK. The GDP of the UK is highly depending upon the growth of small scale enterprises and entrepreneurship business. In the year 2012, the UK government launched start- up loan scheme which include business loans, business advice and mentoring for small scale business. The government aimed to diversify the start-up and entrepreneurship business with the target of 30,000 new businesses by 2015 by investing £120 million. The single market has provided friendly business environment to the UK and another member country of European Union. Moloney (2016) mentioned that the small market is always keen on promoting entrepreneurship by providing financial help and business guidelines. The single market system supports small-scale enterprises competitiveness and innovative ideas for maintaining the growth of the economy. The European Union commission is always ready to provide financial support to the member country. This made the single market focus on SME's with the result that the article 173 of the treaty was completely attributed to small and medium enterprises (Pauzaite & Baryniene, 2014). The number of businesses that provide employment rose to 35,000 and the number of non-employing businesses by 112,000 and both categories registered an annual growth of 3 %. Out of the total number of businesses in the private sector, small businesses accounted for 99.3% and 99.9% were small or medium-sized (SMEs). The total employment in SMEs was 15.6 million which constituted 60% of all private sector employment in the UK (Anon., 2015). The total annual turnover of SMEs was £1.8 trillion which constituted 47% of all private sector turnovers in the UK.
Contribution of different sized businesses to total population, employment, and turnover, at start of 2015(Source- (Anon., 2015))
Of course, SMEs have their issues which include the financial inability to adhere to the complicated administrative and legal framework that the internal market mandates and the inability to compete in a scenario that globalization of production has created. Many SME's are unable to invest towards management training for many businessmen and exhibit unwillingness to hand over control of the management to qualified professionals. The SME's in the UK did have their set of issues by being part of the single market system (Shaw, et al., 1999). Most SME's had to depend on their competencies and differentiators to compete with the bigger companies. They found it highly challenging to adapt to the new environment and had to overlook at conventional methods of survival researching on more cost-effective strategies for production and distribution. The single market uses the common enterprise policy to establish the framework to collaborate the attempts taken by the Member States to support their SMEs, and ensuring that the competition is fair. SME's in the UK may find it expensive and difficult to manage the legislative norms of the EU without being a part of it. (Mulhern, 1994)
The small scale enterprise has done tremendous growth in the UK for the last 7 years because the government has adopted the favourable economic policy for promoting entrepreneurship and startups. Before 2016, the UK market was highly developed and liquidated across the single market. The basic reason was government's financial support and recommendation to small scale enterprise and entrepreneurship. Thus entrepreneurs who function in the single market have access to a bigger market without too much of spending or trade barrier related hassles. In fact, import, as well as exports, work out much cheaper due to tariff removal and there is better access to finance (I. Stefanovića*, 2009). Cross-border transport of personnel, capital as well as other resources can be done in a cost-effective manner with minimal time delays.
UK Leaves the EU – Economy:
GBP: The Free Fall
UK economy is known as among the most stable economy in the world. Somehow their recent decision for leaving the European Union has harmed the profitability and credibility of UK-based companies in the massive scale. The market value of GBP has fallen after Brexit. Before 2016, the GBP was known and most stable currency of the world but somehow it has affected by the shocking step taken by UK government for not continuing as a member of European Union. The recent study of National Institute of Economic and Social Research has found that the value of Great Britain Pound will remain stable in upcoming years. GBP fell sharply when referendum resulted in Brexit, and financial markets around the world felt the tremors. After 31-years, history repeated itself on June 27 Monday when pound fell again to $1.28 (Michael Mackenzie, 2016). Sterling was observed to have dropped around 10% in value which is the weakest since 1985. A month before Brexit, $1.50 was a value of the pound, and the moment Brexit was confirmed, an investor was of the opinion that in order to limit the loss only option available to them is sell-off the UK assets. A graph below is explaining the roller coaster ride pound have been through against dollar.
Source: (Michael Mackenzie, 2016).
Mr. Andy Scott, the HiFX economist, said that investors are clearly afraid of Brexit because a market is going through heavy assets unloading following the Brexit. Furthermore, Mr. Scott said that GBP is undoubtedly considered as a high-risk asset now, and if investors become risk averse, GBP will have to go through another wave of pressure as observed over two days prior to referendum (Michael Mackenzie, 2016).
Upon 20% drop in the wake of UK leaving EU, GBP maintained its falling drive against the USD when markets opened on Wednesday, a day after the referendum, resulted in a further drop of 2 cents. Therefore, sterling fell 1.7% to $1.2796. Euro is another currency which had been through tough times, after all, UK is considered as one of the most economically strong countries (Michael Mackenzie, 2016).
In 2015, UK imported goods and services of around £474 Billion ($625 Billion), chiefly from China, USA, Germany, Netherlands, and France. Now, the UK is going to pay an additional amount to these countries to import the same goods and services, and ultimately the end user will have to pay off the high prices. However, the situation is expected to get better in the case of exporters. Since, the currency has weakened, so UK's exporters will be able to increase exports (Tim Bowler, 2016). Maureen Hinton, retail analyst, from Verdict Retail, said that the considerable fall in the value of the pound is directly going to affect the prices of electrical and clothing because UK is majorly dependent on imports when it comes to these items (Tim Bowler, 2016).
LIBOR – Surprisingly Stable
Immediately after the referendum results were announced LIBOR fell by 1 basis point. Labor has not been affected much by the exit because central banks around the world have been rampaged the financial system with low-cost liquidity for years and have proofed the system sufficiently to not be affected by potential shocks which may result in negatively impacting bank funding. This can also be attributed to the fact that the bond market has brought down the possibility of a more stringent monetary policy from the US Federal Reserve and Treasury yields have taken a sharp nosedive (Brexit - Potential Impact on UK's Banking Industry, 2016). High quality global journalism requires investment. Three-month dollar Libor was set 0.6646 per cent following the exit, up from 0.62 percent on June 24, which indicated a rise in cost to banks borrowing US dollars. The rise in Libor will thus prove beneficial for bank loans, which returned 0.8% during August. Past lowballing played a role here when central banks reacted very quickly to stop the panic in the market. Mark Carney, the governor of Bank of England, issued a statement guaranteeing to provide additional £250 billion pounds for the financial systems to support the liquidity (Gavin Finch, 2016).
Impact on Financial Services:
Brexit has influenced the small financial and nonfinancial institution of UK. The financial services have negatively affected by the exit from the European Union. Financial services like passports, employment, and remuneration. Future investment and sales strategies of small-scale industries have fallen. Banking, insurance, and capital market business have affected after exiting from the European Union in the year 2016. I industry and the online market have not affected by the existing from the European Union. Somehow Brexit movement has pushed the national and international companies to modify their business and financial plans. On the other hand, the exit takes off any barriers that the UK may have had in trading with other non-member countries which in turn increases their export potential. Financial services would be adversely affected by the exit than most other sectors of the economy. It is estimated that the UK can save around 10 billion pounds which are the contribution it makes to the single market's budget in a year (Swathi Dhingra, 2016). A slight increase in productivity can happen because of the lax regulatory framework post exit but any major change can happen only after a clearer picture is obtained on the relationship with the single market (News, 2016).
Impact on Capital Markets:
Capital market and financial market of UK was known as the most stable market. After 2016, the share value of UK based companies slashed due to Brexit movement. The exit from the European Union has created the worries to foreign companies which are operating their business across the UK. Regulation of share market, currency handling, and money laundering has become the biggest issue to the UK government. The British Pound has fallen after exiting from European Union (Anon., 2016). The exit has triggered some major shock waves in the capital markets. Stocks took a sharp decline across global equity markets. US shares declined by 3.6 percent and The Dow Jones industrial average declined by 611 points (Dhingra, 2016). There were huge fluctuations in the currency rates after the exit which was expected. The British Pound, which was trading at 1.50 against the US dollar just a few hours before the referendum results were announced, fell sharply to 1.33 dollars as the results predicted that there would be an exit, falling again by 10 percent and touching an all- time low (News, 2016). There was a slight increase to 1.37 and this sustained for a couple of days. The euro too depreciated against the dollar by nearly 8 percent (Brexit - Potential Impact on UK's Banking Industry, 2016)
Impact on Bonds:
Share prices and bonds of the national and international companies of UK affected due to Brexit. Global investors have started pulling their investment money from the UK because of instability in economy and politics. The liquidity position of stocks and bonds has negatively affected by the exit from the European Union. Weiler (2015) opined that threat of return on investment is not favourable in European market so as it has also affected the UK market. On the other hand, After Brixit UK's economy struggled for only two months. Now the recent data of BBC suggest that UK's financial and capital market is on the right track which is the positive sign for the growth of an economy. The institute of Fiscal Studies has reported that instability of economy has harmed the growth of the capital market in last 3 months. Treasury yields exhibited a steep rise across the maturity spectrum, with the benchmark 10-year yield closing the month at 1.58%, edging close to the higher end of the range it has indicated in the recent past (Anthony Vlaeri, 2016). The scenario of rising rates did not work well for high-quality bonds, with both Treasuries (-0.6% as measured by the Barclays U.S. Treasury Index), and the Barclays Aggregate (-0.1%) showing negative returns for the month of August (John Springford, 2016).
Municipal bonds tried to make the best of the high-quality performance trend and were able to secure a positive return of just 0.1%. Lower credit-quality bonds which are high on sensitivity followed the trend that had set in from mid-February 2016, and global investors are still hopeful of returns in a low- returns scenario (Sampson, 2016). High-yield bonds which were slow post-Brexit regained the momentum by 2.1% and registered a year-to-date return of 14.4%.
Impact on Labour Market:
The government report suggests that from February to July 2016, the number of people has increased in a various field across the UK. There are 23.25 million people are working as full time across the UK which is 434,000 higher than the previous year. The employment rate for the age group of 16 to 64 is 74.5% which is the highest employment rate ever. It shows that exit from European Union has not done massive impact. On the other hand, there were 901,000 unemployed men which are 88,000 fewer than previous years. There has been risen in a number of employees across the UK (Anon., 2016). Since 2012, the number of immigrants to the United Kingdom has grown by almost 50 % crossing 183,000 in March 2015 (Anon., 2016). It is this immigrant population from the European Union that has caused an increase in the labour force of UK by around 0.5% a year. Half of Britain's product exports are to the European Union and free trade with members of the single market will increase exports by 63 %. The future of manufacturing is more uncertain than service sectors of the economy owing to the higher reliance on imports from the EU (Anon., 2016).
Impact of changes in regulatory framework:
Financial conducting authority and Prudential Regulatory Authority directly report to the government and treasury for dealing with the financial affairs of Nagaland. Personal Authority Regulatory provides the report to Bank of England in the regular basis. Every financial institution of UK is monitored and controlled by the regulatory bodies which are FCA and PRA. Banking business has highly affected after Brexit, Especially Bank of England has managed to control the growth of business across the market of UK (Anon., 2016). Changes in regulatory framework influences the banking, legal and financial services of the country, it also affects the economic stability of the country. In particular, Brexit has pushed the government and their regulatory authorities to modify the rules and regulation at the ground level. Somehow political changes also influence the practice of regulatory framework body across the UK in a massive scale. The regulations are stringent and not highly adapted to different countries and their systems (Springford, 2005). Thus it might not be possible for businesses to loosen these regulations to suit their convenience. The policies are designed to drastically bring down trading costs and to liberalize markets in order to ease out a trade within Europe. Only entrepreneurs or businesses who agree to adhere to these norms are allowed to sell their products and services in Europe
Impact on Services:
The financial and nonfinancial services of UK after Brexit got influenced in positive and negative aspect. The financial and nonfinancial institution has faced changing business and legal policy after Brexit incident. The companies faced deregulation because of changes in the tax law, business law EXIM policy and environmental law. The recent data of BBC is suggesting the UK economy is about to pick up the pace. Share market, insurance market, banking market, retail market and transportation business was highly affected during Brexit movement. Cross-border trade and political relationship have negatively influenced. Especially the current member of European Union is having the tough relationship with the UK.
Small scale enterprise and entrepreneurship business have faced difficulties while shifting their respective business from single market system to UK market. The scale of customer and demand of the goods in the single market system was higher as compared to the British market. On the other hand, leaving the European Union is not the only negative aspect for Britain because the country will not let the companies pay tax and income fee to the board of European Union. That meant income and tax money will remain in the only UK which can enhance the economic stability and growth of the country in upcoming years (Anon., 2016).
Service businesses find it trickier to function in the European Union since most trade deals exclude services from their clauses. Services include free movement of people and mandate common regulations. Thus the exit of Britain from the European Union would mean that it would need to negotiate for free movement of human and capital resources within the European Union.
Prior to the referendum Tory MEP and supporter of exit, Daniel Hannan predicted that "If people watching think that they have voted and there is now going to be zero immigration from the EU they are going to be disappointed (Anon., 2016).” This is one prediction that proved to be true. Ex-London mayor Boris Johnson along with senior Tories including Michael Gove, Chris Grayling and Priti Patel who were all supporters of the exit move predicted that there would be EU funding support for areas like farming, science and culture until 2020. French politicians, and people who campaigned against the exit warned that if Britain voted for Brexit, then France would remove border controls at Calais and which in turn would expose Britain to a higher possibility of illegal immigration (Anon., 2016).
Britain's second-largest player in the real estate domain and the owner of Your Move and Marsh & Parson indicates that business had slumped since the referendum and predicts that its annual profits would be "significantly lower than anticipated" (Anon., 2016). London-focused Foxtons also predicts that its returns would be lower than usual. French bank Société Générale predicted last week that "a price correction of even 40-50% in the most premium properties is expected. The Royal Institution of Chartered Surveyors (Rics) predicts that it's the sales would decrease over the summer because buyer queries had gone down "significantly" in June (Anon., 2016). The same was corroborated by the Bank of England when it revealed its plans to revamp its forecast for price hikes. British Airways owner International Airlines Group aptly predicted that uncertainty would adversely affect demand, and the same was confirmed by easy Jet (Anon., 2016).
Professor Minford's bullish scenario is quite contradictory to the common consensus. It predicts that gross domestic product would rise by a gross of 4 per cent by 2020 due to Brexit (Anon., 2016). The Bank of Scotland predicts that the exit will adversely affect Britain's economy in eight out of nine cases, with the impact ranging from 0.1 per cent to 3.9 per cent of GDP by 2030. This is primarily attributed to the rising cost of trade. Sir Martin Sorrell of the world's top advertising agency is of the opinion that it would be costly for Britain to leave. Opinion in other sectors had diverse points of view. Peter Dixon, the economist at Commerzbank, predicts that "In 1975, people took what business said at face value. Today we live in a more cynical age and people don't necessarily assume that what business tells them is necessarily in their own interests." S&P predicts that Brexit would knock U.K. GDP by 1.2 percent next year and 1.0 percent in 2018, indicating lower investment prospects, both in terms of domestic and FDI.
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