ECO501 Effects of Brexit on the UK especially the Nestle
The term Brexit implies the planning of the United Kingdom to the withdrawal of membership from the European Union. It was proved to be the most noteworthy economic separation between two major economies. It was shockwaves for the European Union and rest of the world when the UK voted for leaving its membership from the European Union. The United Kingdom has experienced the rise in the price of fuels, and materials over the last few years. The price hike of those purchasing products touched around 7.6 percent. It caused the slower economic growth of United Kingdom from 0.7 percent to 0.3 percent.
The import costs of manufacturing products raised and it affected the manufacturing industry badly (Gianmarco, John, & Ottavian, 2016). Therefore, it slowed down the growth of industrial revolution of UK by 1 percent. The main causes behind the weak situation of manufacturing industry are lower value of pound on the exchange rate. The decrease in the productivity level of all the enterprises of UK reduces the revenue of the industry without taking some significant steps. However, the UK did not leave the EU yet. Some reports over the final four months of 2016 the growth of the UK economy raised. The gross domestic products (GDP) increased by 0.7 percent. However, the more negative impact on the UK economy for the separation from the European Union is on Britain’s large firms.
The business condition of United Kingdom would have gone to the worse situation. According to the British Chambers of Commerce, the majority of enterprises are experiencing the increase in the expenditure for purchasing raw materials. The disruptions of the supply chain have declined the profits of Britain’s manufacturing company by 30 percent. Most of the retailers and different manufacturing companies are at risk (Kierzenkiwski, Pain, & Rusticelli, 2016). Moreover, the aerospace and pharmaceuticals companies have been benefited for the depreciation in the British Currency. The United Kingdom left the European Union for many reasons. Therefore it had a significant negative impact on some companies that produce brand food products.Nestle company is one of them. The major parts of the produced product of Nestle Company are consumed by the citizens of the UK.
The market price of Nestle products has risen due to the collapse in the value of the pound. The Nestle Company is already affected by the newly emerged market in the global market framework. This breakdown relation between two major economies such as the UK and the European Union has been caused by the increase in the raw materials in the UK. Hence, the Nestle Company is passing through many difficulties in the recent time. The retailers of the Nestle Company are under pressure for various situations such as fall in the pound’s value in the international market, increasing price war in the market (Simon & Frantescu, 2016). It is observed by National Statistics report that the import prices of the raw materials of foods have reached to 10.9 percent. Pricing of the Nestle products has been the greater challenges for the Nestle Company.
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Gianmarco, P. I., John, V., & Ottavian, D. (2016). The consequences of Brexit for UK trade and living standards. London: LSE Research Online.
Kierzenkiwski, R., Pain, N., & Rusticelli, E. (2016). The Economic Consequences of Brexit: A Taxing Decision. Paris: OECD Economic Policy Papers.
Simon, H., & Frantescu, S. (2016). Would Brexit matter? The UK’s voting record in the Council and the European Parliament. London: LSE Research Online.