University of Greenwich ID Number: 001341007

FPT Student ID Number: GBD220253

Module Code: BUSI 1695

Module Assessment Title: The State and Brexit

Lecturer Name: Vo Cong Nghia

Submission Date: 2nd ,August, 2023

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 BUSI 1695- International business and environment
Reflect Report: The State and Brexit

Table of Contents
1. Introduction .............................................................................................................. 3

2. Related to different types of economies..................................................................... 3

2.1. Definition of the State ............................................................................................... 3

2.3. Command economy: ................................................................................................. 3

2.4. Transitional ................................................................................................................. 3

3. Democracy ................................................................................................................ 4

4. The formation of the EU ............................................................................................ 4

5. Brexit ........................................................................................................................ 5

5.1. Background ................................................................................................................ 5

5.2. The short and long-term effects of a labor shortage upon the UK economy .......... 5

5.3. Brexit’s effects on the UK economy ......................................................................... 6

5.4. Brexit: Aftermath ...................................................................................................... 6

6. Conclusion ................................................................................................................ 7

7. References ................................................................................................................ 8

Appendix 1: Different types of market model ................................................................. 10

Appendix 2: The difference between autocratic and democratic leader ...................... 11

Appendix 3: Case study summary: Labour shortage should not be seen as simple case of
business, by Helen Thomas of the Financial Times ............................................................ 12

Appendix 4: Brexit (Presentation) .................................................................................... 13

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1. Introduction

The Anglo-Saxon model, the social market model, and the Asian model were the three major
market models. However, the socioeconomic status of nations has shifted. The united Economy
has evolved since World War II, with the United Nations and WTO fostering an integrated
economy. Brexit, which resulted in the United Kingdom's decision to leave the EU in 2020,
has had a tremendous influence on the European Union, the world's largest economic bloc.
This paper investigates state theories, economic systems, the distinction between democracy
and autocracy, as well as the influence of Brexit on the UK's economy. The report also
examines the impact of Brexit on the UK's economic and labor shortage, utilizing various
authors' articles to provide a comprehensive understanding of the situation.

2. Related to different types of economies

2.1.Definition of the State

The state is a type of human association characterized from other social groups by its objective,
the establishment of order and security; its means, laws and their enforcement; its territory, the
area of authority or geographic bounds; and, finally, its sovereignty. The legislative body, the
judicial system, the civil service, law enforcement, and the military comprise the state.
(Britannica, 2023)
2.2.The State's responsibility in the economy
Establishing a legal framework for business entities, developing economic policies, building
essential services and infrastructure. Also, the state can legitimately enforce intervention to
stabilize the market, protecting the vulnerable and the environment (Needle & Burns, 2019).
2.3.Command economy
According to Professor Richard E. Ericson in "Command Theory" (2008), A command
economy is one in which economic activity is coordinated through administrative means -
commands, directives, targets, and regulations - rather than through market mechanisms. A
complex social economy is one in which economic players have multiple essential
interdependencies, including significant division of labor and trade across units of production,
which makes the viability of each unit dependent on effective communication with, and
the function of many other units (Ericson, 2008).
2.4.Transitional

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Transitional economies are defined as economies that are undergoing structural reform in order
to become more market oriented (Round, 2009).

3. Democracy
Robert Dahl and many shcolars stated that Democracy is a form of administration in which
laws, regulations, governance, and fundamental operations of a state or other polity are decided
either directly or indirectly by the "individuals," who have historically been just a minority of
the population (Dahl, et al., 2023).

4. The formation of the EU

In 2018, the EU, which was founded in 1952 as the European Coal and Steel Community, had
28 member states. The previous ECSC's purpose was to optimize the benefits of open
movement of products, finance, and citizens while also profiting on a massive domestic
European market. In order to achieve these goals, it is proposed to bring the peoples of Europe
closer together and to run a single market with a common currency. The Treaty of Rome (1957),
the Single European Act (1987), the Treaty of European Unity (1992), the Treaty of
Amsterdam (1997), and the adoption of the united currency - euro in 1999 were all milestone
points in European history (Needle & Burns, 2019).
Throughout the timeline, the EU has been evolving in stages in the table below:
Table 1: Stages in the development of the European Union (Needle & Burns, 2019).

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5. Brexit
Brexit is an shortened word for Britain and Exit, and it has come to stand for the idea that
Britain is going to exit the European Union and restructure its association with the EU in the
areas of business, safety and security, and migrations (Mueller & Robins, 2023).
5.1.Background

The UK's EU membership was never a full member, leading to a divisive issue in British
politics. The British referendum in June 2016 on maintaining an entity of the European Union
(EU) was a historic turning point in the UK-EU relationship. The result, a 51.9% to 48.1%
victory for supporters of Brexit on a 72.2% turnout, was considered as a defeat by the prime
minister, David Cameron, who soon had to resign. In March 2017, the British government,
headed by the prime minister Theresa May, invoked the provisions of Article 50 of the Treaty
on European Union, initiating the UK's exit from the EU – the Brexit procedure (Bulmer &
Quaglia, 2018).
5.2. The short and long-term effects of a labor shortage upon the UK economy
In the short term, labour shortages in the UK can lead to supply chain disruption, which is
catastrophic for the UK. For example, the COVID-19 pandemic has caused labour shortages in
many countries around the world, leading to supply chain disruptions and higher prices. The
COVID-19 epidemic has had far-reaching effects on all parts of society, with one of the most
serious results being labour shortages in the United Kingdom. Because the virus spread so
quickly, many industries were compelled to close or limit their operations, resulting in a
considerable reduction in available labour. This labour shortage has harmed the country's
supply networks, which rely significantly on the efficient transportation of products and
services (Pettinger, 2021). This mismatch between labor needs and labor supply has resulted
in a series of significant stress tests on the UK economy, which, when combined with Russia's
war in Ukraine and lingering uncertainties generated by the epidemic, is causing massive
disruptions in crucial sectors of the economy. This is exacerbating the United Kingdom's
inflation problem while also undermining the country on the international stage (Abramsky,
2023).

The labour shortage could have negative consequences for the UK economy in the long term.
It could hamper productivity growth, as businesses struggle to find qualified workers and invest
in new technologies, leading to lower productivity and economic growth. It could also increase
inflationary pressures, as wages rise faster than prices and demand outstrips supply.

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Furthermore, it could reduce tax revenues and increase public spending, as fewer workers
contribute to social security and more people rely on benefits and health services (Pettinger,
2021).
In “Labour shortage should not be seen as simple case of business”, a case study conducted by
Helen Thomas, an author of the Financial Times, the Labour shortage in the UK is a result of
the COVID-19 pandemic and the upcoming Brexit. The shortage of qualified drivers for
transportation, such as HGV drivers, is expected to be 100,000 fewer by the time Brexit occurs.
This leads to failures in haulage, retail, food, and drink manufacturing. Social distancing and
strict policies during the lockdown also exacerbate the situation. To make things worse, Brexit
also prevents EU citizens from moving freely to England. Even though the British government
plans to issue 5000 short-term visas until February next year. However, shortages can still
occur unexpectedly, with smaller businesses most likely to suffer. The UK faces a grim future
due to the COVID-19 pandemic and Brexit, with no guarantee of a quick recovery.
5.3. Brexit’s effects on the UK economy
According to one analysis, Brexit has reduced trade between the United Kingdom and the
European Union by 20%. Even if the COVID-19 pandemic and the war in Ukraine have severe
consequences, they will be temporary, whereas the impact of Brexit will be long-lasting.
"Leaving the EU has certainly slowed the UK economy," says Associate Professor Thomas
Sampson of the University of Economics in London, UK. "New trade barriers have made it
more difficult for British companies to do business with the EU." Overall, the UK economy is
growing more slowly, and the UK is becoming poorer as a result of Brexit." (Anh, 2023)
5.4. Brexit: Aftermath
• Social
According to a YouGov poll, 53% of British respondents feel Brexit was a mistake, while only
32% favor the withdrawal. According to Ipsos surveys, 45% of the people felt Brexit had a
negative influence on their everyday life, while just 11% thought it had a favorable one.
According to Focaldata and UnHerd polls, 54% of 10,000 respondents strongly or moderately
agreed that Britain made the wrong decision by leaving the EU. These data reveal broad
skepticism toward Brexit, as a sizable proportion of the population views the choice as a
blunder with negative consequences for their life (Smith, 2023).
• Economy
First and foremost, trading activities. The most obvious and direct impact of Brexit was the
reintroduction of considerable trade barriers between the UK and its main trading partner, thus

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the effects should be most visible here. The headline consequence is that the UK's trade
performance has weakened significantly. The Office for Budget Responsibility observes that
the UK's 'trade intensity' (trade as a percentage of GDP) has declined dramatically, and
significantly more than that of other advanced nations (Portes, 2023).
The second issue is immigration. Again, the most obvious and direct impact of Brexit was the
termination of free movement, which has undoubtedly limited labor supply - net immigration
from the EU, which peaked at over 200,000 per year at the time of the referendum, is now
negative. As projected, the main impact has been increased prices and reduced output in the
impacted sectors, rather than significantly higher pay. Indeed, recent pay growth has been faster
in areas such as finance than in sectors more directly impacted by decreasing migration flows
(Portes, 2023)
6. Conclusion
Wrapping things up, market ideas, diverse economic systems, and the role of the state in the
economy have all been thoroughly addressed. In the primary theme, Brexit has had a serious
impact on the UK economy, from losing the benefits of being an EU member to labor shortages
during the Covid-19 to economic failures in many areas. British citizens began to understand
the ramifications of leaving the EU and losing faith in the UK Parliament. A bleak image of
the UK economy emerges, and until the UK government addresses the issue effectively, there
is no guarantee of a brighter future for Britain.

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7. References
Abramsky, S., 2023. Consequences of Brexit Are Surfacing as UK Faces Severe Labor Shortages.
[Online]
Available at: https://truthout.org/articles/consequences-of-brexit-are-surfacing-as-uk-faces-
severe-labor-shortages/ [Accessed 30 July 2023].
Anh, V., 2023. Nước Anh trở nên nghèo hơn sau ba năm Brexit?. [Online]
Available at: https://vtv.vn/the-gioi/nuoc-anh-tro-nen-ngheo-hon-sau-ba-nam-brexit-
20230202114557278.html [Accessed 12 July 2023].
Britannica, 2023. State. [Online]
Available at: https://www.britannica.com/topic/state-sovereign-political-entity [Accessed 21
July 2023].
Bulmer, S. & Quaglia, L., 2018. The Politics and Economics of Brexit. Journal of European Public
Policy, 25(8), pp. 1089-1098.
Chuckwusa, J., 2018. Autocratic Leadership Style: Obstacle to Success in Academic Libraries.
Library Philosophy and Practice, 1(1), pp. 1-8.
Dahl, R. A., Shapiro, I. & Froomkin, D., 2023. Democracy. [Online]
Available at: https://www.britannica.com/topic/democracy [Accessed 26 July 2023].
Ericson, R. E., 2008. Command Theory. In: The New Palgrave Dictionary of Economics. London:
Palgrave Macmillan, pp. 1-16.
Gastil, J., 1994. A Definition and Illustration of Democratic Leadership. Human Relations,
47(8), pp. 953-975.
Henley, J., Savage, M. & Tapper, J., 2021. Emergency Visas Won’t Tempt European Lorry
Drivers to UK, Say Haulage Chiefs. [Online]
Available at: https://www.theguardian.com/business/2021/sep/25/european-lorry-drivers-
will-not-want-to-come-to-uk-warn-haulage-chiefs#:~:text=1%20year%20old- [Accessed 31
July 2023].
Mikayil, O., 2017. STATE INTERVENTIONISM. [Online]
Available at: https://www.linkedin.com/pulse/state-interventionism-orkhan-mikayil/
[Accessed 27 July 2023].

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Mueller, B. & Robins, P., 2023. What Is Brexit? And What Happens Next?. [Online]
Available at: https://www.nytimes.com/article/brexit-uk-eu-explained.html [Accessed 23
July 2023].
Needle, D. & Burns, J., 2019. Business in Context: An Introduction to Business and Its
Environment. 7th ed. Boston: Cengage.
Pettinger, T., 2021. Effect of Labour Shortages. [Online]
Available at: https://www.economicshelp.org/blog/25536/labour-markets/labour-
shortages/ [Accessed 21 May 2023].
Portes, J., 2023. The impact of Brexit on the UK economy: Reviewing the evidence. [Online]
Available at: https://cepr.org/voxeu/columns/impact-brexit-uk-economy-reviewing-
evidence [Accessed 30 July 2023].
Round, J., 2009. Transitional Economies. Encyclopedia of Human Geography, 3(1), pp. 335-
360.
Smith, E., 2023. 'Bregret'? Many Brits are suffering from Brexit regret. [Online]
Available at: https://www.cnbc.com/2023/03/03/brits-are-suffering-bregret-but-brexit-is-
no-longer-a-priority-data.html [Accessed 30 july 2023].

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Appendices
Appendix 1: Different types of market model
There are different market model that has been research in academic literature including Free
Market economy
Anglo-Saxon:
Anglo-Saxon economy is a liberal market political economy centered on the free market,
individualism, and private property that exists in the United States, the United Kingdom,
Canada, Australia, and New Zealand. It is extremely competitive, with shareholders serving as
the major stakeholder, resulting in frequent swings and a flexible labor market (Needle and
Burns, 2019).
Social Market:
The model of the social market, commonly referred to as the German structure or Rhineland
model, emphasizes the need of a free market while requiring strict governmental oversight and
regulation. Private and public ownership coexist alongside extensive social welfare systems,
with markets and individual businesses governed by law and governmental bureaucracy. Trade
unions play a significant role in redundancy decisions. Shareholders and workers are both
considered stakeholders, with corporate governance emphasizing societal duty above
shareholder interest (Needle and Burns, 2019).
Asian Model:
The Asian capitalism concept is commonly employed in Japan and other Asian tiger
economies, particularly South Korea. It is alternatively referred to as the Japanese model,
alliance capitalism, or social capitalism. It is centered on a free market with limited government
intervention and is influenced by Confucian concepts such as discipline, hard work, duty,
harmony, and saving. If there are, trade unions have limited strength and controlled by business
or the state, but they are critical for defending weaker employees (Needle and Burns, 2019).

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Appendix 2: The difference between autocratic and democratic leader
Autocratic leadership: An autocratic leadership is known for exercising total control over all
decisions and allowing little input from employees. Autocratic leaders often make decisions
based on their own ideas and judgments, and they rarely take suggestions from followers
(Chuckwusa, 2018).
Democratic leadership: John Gastil (1994) cited a statement of distinguished scholar Kurt
Lewin’s democratic leadership definition: Democratic leadership is defined as behavior that
impacts others in ways that are consistent with and/or beneficial to fundamental democratic
ideals and processes such as self-determination, inclusion, equitable involvement, and
deliberation (Gastil, 1994)

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Appendix 3: Case study summary: Labour shortage should not be seen as simple case of
business, by Helen Thomas of the Financial Times

In the case study of the labour shortage in the UK, the main causes are both the unexpected
COVID-19 and the expected upcoming Brexit. It takes nine months for a driver to be qualified
as an HGV, and Covid-19 has made the whole testing canceled until next year. The
government's emergency visa scheme for thousands of lorry drivers is insufficient to handle
Britain's supply-chain crisis and is unlikely to draw them to the country. To assist the food and
fuel industries, the plan hopes to hire 5,000 HGV drivers and 5,500 poultry employees before
Christmas. However, the head of the European Road Haulers Association, Marco Digioia,
warns that more than a temporary relaxation of immigration laws is required. He believes that
there is a driver shortage throughout Europe and is unsure how many would want to relocate
to the UK (Henley, et al., 2021). And by the time Brexit happens, the 100,000 drop in the
number of drivers is estimated. The reasons for the labour shortage in the UK are:
• Covid 19 breakouts made most business activities shut down due to social distancing.
This made the lorry drivers stay at home, which is a challenge due to no income and
high truck maintenance costs.
• Brexit happened which led to the policy of an EU citizen will not be able to apply to
British people. British truck drivers working in other EU countries will not be able to
stay without appropriate document papers or ID. This forced them to head back to their
hometown and with the current situation, finding a suitable job is nearly improbable.

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Appendix 4: Brexit (Presentation)

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