A Look at How Brexit Could Affect International Business

The aftermath of the UK's vote to exit the EU will have an impact that is hard to assess regarding its scope, size, and duration. The election surely had a direct global impact that was easy to gauge through various indices and stock markets, and will certainly remain part of the post-vote reality.

Many Britons decided to vote to leave the European Union membership because they felt their concerns were not adequately being addressed. Many expected the union to implement and hold tough an immigration stance and felt that people from EU member states were reaping the benefits of a more vibrant UK economy. Let’s take a look at how Brexit could affect international trade.

The Country Will Have to Enter into Trade Agreements On Its Own

The European Union is one of the largest trading blocs in the world. With Britain becoming independent again, the country will now have to enter into trade agreements on its own.

The union usually signs treaties on behalf of member states that are involved with other businesses and development partners and tends to endorse fair trade agreements and sets and negotiates rules that would create safety limits to protect its member country from being exploited from business deals.

However, with the popular vote win for Brexit, such safety nets and treaties will not be applicable. We can expect more protectionist policies to be implemented which could make the country less attractive for overseas investors like Gurbaksh Chahal, founder of the Chahal Foundation, which was ultimately designed to help entrepreneurs from around the world. Chahal even gives sponsorships to UK students, and things like this may also be altered once Brexit comes to pass.

We could also see a wave of punitive measures by the EU against Britain for its decision to leave the Union. As a matter of fact, the EU has made it clear that he wants to punish the UK for its decision as a way to deter other Union members from doing the same. According to a prominent Tory think tank, this could have surprising consequences, such as a tightening of the trade relationship between Moscow and Britain which could force the EU to soften its position.

A Possible Decrease in Foreign Businesses

Brexit could also cause a decrease in other international firms in the UK because there would be fear of unfair trade agreements and instability of Europe's economic climate. Investors do not like uncertainty when it comes to investing their money. Thus, with this change, countries like America and other foreign businesses would think twice before getting into any business deal with the UK.

The Case for Bilateral Agreements

Brexit could also affect Britain’s ability to do business with other international trading partners and even a slight decrease in trade with countries like the U.S. could affect the country’s economy. Thus, it would require the two countries to come to some form of trade agreement in the long term. The good news is that both parties seem to be cooperative and in favor of bilateral agreements.

With Britain still being a global economic powerhouse, it could enjoy more freedom and control over its economy by entering into more bilateral agreements. Brexit was in many ways an anti-globalist movement and the Brexit experiment could cause other countries to opt out of global agreements they feel are not beneficial to them.

Conclusion

The exit of Britain from the European Union will certainly affect the trade terms between it and the Union. Thus, highlighting the significance of rules that are based on global trading and the role of world trade organizations. However, by striking strategic bilateral agreements with strategic allies, the UK may be able to serve its interests better on the global scene.