Question

Problem 1.

A) Identify how protectionism influenced BREXIT. Be specific, give details.

B) Describe and explain the economic consequences in the areas of export, production, import, labor and investment of BREXIT. Be specific, give examples.

Answer 1

a) Protectionism is an economic policy of restricting  imports from other countries through tariffs,quota and other government regulations.BREXIT refers to the United Kingdom moving away from the European Union.BREXIT is an example of Protectionism.EU tariffs protect French agriculture , Italian clothing and shoes , German industrial output . Thus the  EU protects the interest of the founder members by imposing high tariffs on non European goods and was the main cause of UK leaving the EU.

b)Advocates of BREXIT argue that it will break the control of EU in trade and make a new 'Global trading 'Britain nation.However critics argue that it will have both good and bad consequences because prior to BREXIT, EU was UK's largest trading partner prior to BREXIT and trade will suffer.UK will lose about 14% of its exports to EU .Since BREXIT, the pound has lost 15-20%of its value as compared to euro and the dollar and it means the economy will slow down.Cost of doing business with imported goods will increase.Again businesses that earn revenue from UK and face competition from foreign countries will gain as consumers will purchase domestic goods leaving expensive imported goods .In the long run,production will increase as production of domestic goods is cheaper.Exports to other overseas countries will increase and imports will decrease due to high prices.Immediately after Brexit, European firms reduced new investment in UK..Another economic impact of Brexit is that it reduced labor migration.