The Essay On Announcement Effects: UK Stock Market - Discussion And Recommendations.

Discuss About The Announcement Effects On The Uk Stock Market?

This section of the paper addresses the final results that have been obtained from the earlier section and the measures that have been taken with the help of which effective results have been collected. The results gathered would be connected with the above constructed objectives in order to ascertain whether the results obtained is true for this paper or not. The results are compared with the objectives and accordingly the completion of the paper can be undertaken. This section would even determine the recommendations and the future scope that is associated with this paper.  

The repercussions of Brexit will not only be seen in the UK but the remainder of EU will also experience the impacts. Since UK is a major contributor to the EU budget even with the rebates it negotiated. It has become apparent that the remaining EU members will have to put more effort in filling the gap left by the EU. The most pragmatic decision here will be to increase the input of the remaining members. A reduction in the total spending would also be a viable approach but this will also create deficits in the support given to individual member states. In matters of trade, EU exports to the UK will reduce significantly whereas the imports will face higher taxation rates. This is in the event of hard Brexit. A reduction in the EU’s GDP after withdrawal of Britain will remove EU from its prestigious position as a trade partner.

It can be said that EU may suffer from reduced biomedical research on diseases and their treatments as British Universities have been the centers of research with funding from EU. Final Brexit negotiations may see EU spending more in establishing and upgrading research centers in other EU countries. It can also be concluded that Brexit will shift investments away from Europe over time as UK position in the EU was the main attractant of other foreign markets. An alternative to this would be for new locations to strategically place themselves as preferential investment localities. This can only be achieved if EU pressures national governments to liberalize their markets and create business environments conducive for investment.

Brexit will also cause a lag in the adoption of liberalizing policies as it was among the liberal economies in the EU rallying support for more freedom and opposing policies that are illiberal. With its exit, the remaining liberal countries such as Germany, Netherlands, and Ireland will lack the voice, up to 35% of votes to push for the same. Germany will thus particularly be put in a precarious position as it will be leading the opposition in the European Council when deliberating against illiberal policies. The nations who are not so vocal on liberalization will be more powerful.

Recommendations

This is also confirmed that the non-Eurozone member states will be overridden in policies that Eurozone members might pass to favor them. UK always blocked such moves and in its absence, the marginalization of the non-Eurozone member states may cause political tension within the EU as these countries will seek to influence and be heard in other ways. Denmark is especially feared to be contemplating a ‘Denxit’ just like UK after its withdrawal from the Eurozone. This could further trigger similar decisions from other countries that are also after liberalization.

When UK effects border controls at the end of negotiations, EU will bear the consequences as more immigrants will divert to other EU countries. As immigrants tend to bring in labor and specialized skills, these other countries will benefit from the influx, Germany has been predicted to experience positive effects on this. On the other hand, countries from which immigrants are drawn particularly Poland will have a surplus of labor and skills but the country will not enjoy financial benefits as this is the major reason why its citizens look for better opportunities elsewhere. Countries like Spain where Briton retirees prefer to settle down will benefit from the pension remittances UK will extend to these retirees in their preferred country of stay. Also, successful border control may trigger other countries to push for immigration policies similar to the UK. France has already shown interest in this however there lies a big difference in the type of immigrants that these countries seek to restrict. While UK targets immigrants from EU, France will be closing in on those from outside EU. Thus, it can be easily comprehended that thoughts correlate with this and also add that the diversion of immigrants into other member states may cause political mayhem as this has also been contentious for other EU member states. Poland will also lose out on the money that its nationals working in the UK usually send home.

Though the Eurosceptic and the Pro-European factions of the Brexit referendum were very vocal on defending the positions and pushing for their side of the vote, what these two groups did not give was the options to be pursued after the vote outcome.With the ‘leave’ vote now being a sure thing,Britain must take a path to follow.Research indicates that there are four models that UK could take up,namely:

• The Norwegian model
• The Switzerland model
• The WTO model
• An FTA model

With hard Brexit looming following insinuations by PM Theresa May, the WTO model remains as the plausible option. Under the WTO model, the UK will not be subject to any of the EU legislation and any dealings, particularly in matters of trade, will be done under WTO agreements.UK could regain its freedom and also impose its control on migration(Besslich 2013, p. 42; Vasbo 2015, p. 67). Vasbo(2015)says that this approach would automatically eliminate Britain from the single market which is disadvantageous as it goes against its liberal trading culture and is likely to put off trade with EU due to increased trading costs. The prospect of UK trading with other parts of the world on a solo ticket may also prove futile as most trade partners target the European Single market and hence may look for other partners that will grant them these privileges. The only trade that Britain will be left with is on goods and services that rely on UK competence rather than on the influence of the EU (Irwin, 2015, p. 6; Vasbo, 2015, p. 68).Besslich (2013, p. 42) insists once UK takes this route,there is no rejoining EU when things turn bleak.

The second option would be to opt for a bilateral agreement. Such a deal would enable the UK access certain benefits offered by the EU while not being burdened by full membership, Switzerland and Norway enjoy this arrangement.In the Swiss model, the benefits are limited as it only belongs to the European Free Trade Association(EFTA). Switzerland chooses the areas, political or economic that it would wish to cooperate in with the EU. If UK chooses this model,it will be exempted from contributing towards the CFP and CAP;it would also be in a flexible position to pursue its interests in external trade independently or via the EFTAjust like Switzerland does.UK would further be excluded from the employment and social law which it sees as unwarranted burden to employers and businesses.It will only be expected to follow through with the regulations in its bilateral agreements with the EU (Besslich 2013, p. 45).

Despite the attractiveness of this model, UK will have to incur the costs ofa loosened integration.Like Switzerland, it will only have access to components of the single market that it has subscribed to hence losing out on the full advantages of the integrated market.UK will no longer influence  EU decisions as it will only be required to comply.The free movement of services which UK currently enjoys will be lost and movement of its goods will be subject to the ‘origin rule’ and this goes against its liberalization ideals(Dhingra et al., 2016, p. 6). For so long Switzerland has failed to reach a consensus with the EU on the regulation of financial services and UK may experience the same difficulties.EU is also unlikely to bow down to the UK demands in such a partnership and as such,weighing the gains and losses of this model,it does not reflect as a rational alternative(Besslich 2013, p. 45; Irwin 2015, p. 6; Vasbo 2015, p. 69).

Norway along with Iceland and Liechtenstein belong to the EEA (European Economic Area).EEA members operate in a free trade area which gives these countries control over their trade policies(Dhingra et al. 2016, p. 4). Unlike the EU members, Norway determines the tariffs it imposes on non EEA trade partners and also individually engages those countries outside EU for convenient agreement without interference from EU. Additionally, they have full access to the European single market yet they are not bonafide EU members. This necessitates Norway to adopt EU regulations to standardize operations in the market. The only areas of EU that Norway is excused from are the CAP, CFP, CFSP, monetary, justice and immigration policies(Besslich, 2013, p. 43; Vasbo, 2015, p. 68). As it does not belong to the EU Customs Union, Norway has to comply with the non-tariff barriers of antidumping and rule of origin (Van Reenen 2016, p. 370).

If UK negotiates for this model, it will be reprieved of its previous commitments to these policies. Still, the model comes with its own tradeoffs. Like Norway, it may have some input into EU decisions as the Commission consults EEA countries but nevertheless, it will lose its voting rights over any decisions and neither will a friendly stance be found with the European Parliament meaning that they will have to rely on secondary sources on the debates in EU parliament.UK will also be required to continue under the EU regulations in the single market. Its contributions towards the administrative functions of the union will remain and in addition, it will be required to chip in the cohesion fund. Unfortunately,UK will also not be receiving financial support it was used to and can also not negotiate for a rebate for the contributions allocated to it. Though appealing from an economic approach, this model will compromise the sovereignty and political influence of Britain as it will be subjected to rules that it does not participate in formulating(Besslich 2013, p. 44; Irwin, 2015, p. 6; Vasbo, 2015, p. 68).

A final alternative for Britain would be to seek a unique but comprehensive free trade agreement (FTA) with EU. It is expected that UK will ask for conditions that will suit it knowing that its influence in the EU is appreciated by its friends. What is uncertain is the extent to which EU member states will compromise to grant UK its wishes, putting in mind that the latter voluntarily walked out on them(Besslich 2013, p. 46).However, it is in the best interests of EU to find a common ground with UK so that the member states may not suffer as they have comparatively invested in UK financial markets and trade. The EU is also more attractive as a trade partner with UK in it as opposed to without it(Irwin 2015, p. 9). UK also would not wish to lose its largest trade partner as this would lead to a loss in trade volumes that could not be covered by other markets.UK would have to give up bits of its sovereignty while EU would allow it liberty in certain areas though not at the expense of the member states. This would be regarded as an equal exchange though it would take a long time for it to be concluded and a final agreement drawn(Irwin 2015, p. 6; Vasbo 2015, p. 60).

There are various aspects in accordance to which future researches can be taken. With the advent of time, there can be transformations in the policies and the regulations that can have an impact on the logistics for the unprecedented impacts of Brexit. The changes that would be taking place would helpful in undertaking new and improved researches on similar topics with the help of which better and enhanced researches can be taken in accordance to the changes that have been taking place from time to time. 

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