impact of the UK exiting from the EU community and how the Brexit impacts the current and future of the UK’s finance industry
- Introduction
Following the exit of the UK from the EU, speculations have been rampant surrounding the impact of Brexit on the UK economy. There is vagueness as to how the finance sector will function, and the UK’s financial services will manage with Brexit. The new tariff would impact the UK exports, make the goods more expensive and increase the import prices, thus creating inflection and affect its currency. The new agreement between the UK and the EU could raise tariffs hence cause inflation (Amadeo and Berry-Johnson, 2020). It is not clear how the trade between the UK and the EU will be conducted. The UK has already started suffering from Brexit; its economic growth slowed by 1.8% in 2018 from 2.4% in 2015. The Brexit is expected to lower the UK growth by 6.7% in the next 15 years. Businesses, especially banks, have moved from London (the UK’s financial hub), which has seen its growth go down to almost zero in 2019. While the UK and EU’s new trade negotiations are still ongoing, it is inevitable that whatever the outcome might be, the relationship will never be the same after transition and during the implementation of Brexit (Peat and Kelly, 2016).
1.1 Aim and Objective
This paper wishes to establish the impact of the UK exiting from the EU community and how the Brexit impacts the current and future of the UK’s finance industry. Consequently, the primary purpose of this paper is to determine;-
- What are the impacts of Brexit on the UK financial industry and its economy?
- What are the Brexit’s effects on the global Financial Industry?
- How is the future of the financial sector after Brexit?
- How is the banking industry responding and preparing for Brexit?
1.2 Justification
According to past researches, UK, specifically, London, is a financial hub for financial services, and the count hosts many Bank headquarters (Warner, n.d.). Additionally, the UK financial services are the country’s biggest exports, representing 10% of its total exports. The UK leads in other areas like the Insurance sector and cross border bank lending services (Appendices 1). These few aspects worry the global economy and the banking industry on what will happen to the industry after Brexit, the impact on economics, and the future of the finance industry in the sense that finance drives everything in human’s daily lives.
- Literature review
At present, the UK has experienced some slow growth, because some banks have moved their headquarters to a different country. Also, the euro has started to weaken, an implication that things have begun taking an unusual move. The research on the impact on Brexit to the UK financial industry will give a leeway of establishing what to an extent are the current moves affecting the global finance industry and economy. While it’s too early to speculate what will happen to the EU after the transition, it is uncertain how the move will impact it, and if its future will be inevitable. Could there be more exits after Brexit? There is no much information on this, but the move could primarily affect EU operations.
Although the UK is pushing for new trade deals with the EU to stop trade barriers and stop new tariffs, it is uncertain if this changes the current UK’s trading partnership with other countries (Warner, n.d.). Should the UK think of alternative policies and other deals? There could be better deals with other countries that can make the UK finance industry grow. This paper will establish if there are alternative policies put in place or being discussed and how they are likely to improve or impact the Brexit move. Also, the right of pass-porting has a financial impact on the UK finance sector (McMahon, 2016). Uncertainty of Brexit’s impact on Britain’s social, political, and economic future, not forgetting other issues, such as trade in goods and services, agriculture, fisheries, and financial regulations, which other researchers have recommended further research. All these will play a role in shaping the UK’s financial industry and the global economy and forms the basis for developing a questionnaire.
Some authors, like Deloitte, will provide credible information on the impact of Brexit on UK banks, the banking sector, and capital markets. While Reuters has information on the tax loss, loss of jobs and trade options, pass-porting, these will affect the economy, among other authors. The data from these authors will be used to formulate the research questionnaire and analyze numerical data through polls and interviews.
2.1 Relevance, source of data and use of knowledge
After drafting the mind maps, Fig 1 is distinguished that some authors such as Delloite and Reuters, among others, and keywords like “financial services” Trade options” and “economic impact,” to mention a few, have the most relevant information. Therefore, there is sufficient online data to analyze the current situation. However, it’s good to note that the Brexit transition is ongoing, and this paper will rely on the information resulting from the unfolding of events during and after the negotiation if they occur before the research is completed.
2.2 Standards
The dissertation paper is developed using Harvard referencing formatting standards. The page layout will be A4, and the entire paper research will use Times New Roman, Body Size: 12.
The referencing will be presented in the below format:
Online journal format:
Author surnames(s), initial (s). (Year) “Title of journal’, volume (issue/season) [online], Available at URL or DOI (Accessed: day month year).
Book format:
Author surnames(s), initial (s). (Year Published) “Title of Edition, E-book format (e-book reader), Available at URL or DOI (Accessed: day month year).
Online newspaper article:
Author surnames(s), initial (s). (Year) “Article Title’, Newspaper Title (edition), day month [online], Available at URL or DOI (Accessed: day month year).