Wealth of the Nations and Brexit

2. History
General economic view
at the time: gold and
silver = wealth
Nations focused on
exports over imports

3. 1776 - Smith rejected the Townshend Act
which declared that there would be taxes
on tea, paint, glass etc
Refused this act because of his beliefs:
•Nations wealth is in goods and services (not
silver and gold)
•Basically embodied mercantilism: developed
industry based on the balance of trade in
Europe.
•Wrote Wealth of Nations to express views
More History:

4. “In those great manufactures, on the
contrary, which are destined to supply the great
wants of the great body of the people, every
different branch of the work employs so great a
number of workmen, that it is impossible to collect
all into the same workhouse.”
-Claiming that division of the manufacturers helps
supply a greater amount of products
-Example:Trade of pin-making
Division of Labor

5. Laissez faire economics: No government interference
-Tariffs/taxes
- Restrictions/limitations
-Corruption
Allow free competition, free trading
Let the market expand to its full production capabilities
Adam Smith disagreed on one thing: government involvement is necessary
to uphold contracts, laws, needed for security
Government needed to get involved after stock market crash-1929
New deal-1930
Economics

6. Rolesof Government
-Defense
-Justice
-Education
-Maintenance of commerce
-Fair and clear
taxation

7. Nations need to save money for economic progress
Invest in labor-saving technologies
More investing/saving = more efficient production
- Everyone will become wealthier
Accumulation of Capital

8. Countries should do what they are best at
-ex: France should produce and trade
grapes because they are plentiful; not
Scotland
Restrictions of foreign trade should be
prohibited
ForeignTrade

10. WHAT IS BREXIT?
THE UNITED KINGDOM (UK) INTENDS TO WITHDRAW
FROM THE EUROPEAN UNION (EU), A PROCESS
COMMONLY KNOWN AS BREXIT, AS A RESULT OF JUNE
2016 REFERENDUM IN WHICH 52% VOTED TO LEAVE
EU.
THE TERM “BREXIT” IS SHORT FORM OF THE WORDS
“BRITISH” AND “EXIT”.
What is European Union?
The European Union is a political-economic
union of 28 member states that are located
primarily in Europe

11. Reasons for BREXIT
 Britain did not get their money back. In cash terms,
Britain is the second biggest contributor to EU
budget after Germany.
 Britain could decide who comes into the country.
 Britain could make their own laws again.
 Britain would not have to accept the decisions forced
on them.
 Britain could set their own tax rates.
 Britain could have blue passports again instead of red
one.
 Britain would not have to fund EU foreign aid.

12. 1975 REFERENDUM
In 1975, the United Kingdom held a referendum on
whether the UK should remain in the European Economic
Community (EEC) or not.
Choice Votes %
YES 17,378,581 67.2
NO 8,470,073 32.8
Valid Votes 25,848,654 99.79
Invalid or Blank Votes 54,540 0.21
Total Votes 25,903,194 100.00

13. 2016 REFERENDUM
David Cameron announced a referendum date of 23 June 2016 and set out
the legal framework for withdrawal from the European Union in
circumstances where there was a referendum majority vote to leave, citing
Article 50 of the Lisbon Treaty.
CHOICE VOTES %
Leave 17,410,742 51.89
Remain 16,141,241 48.11
Valid votes 33,551,983 99.92
Invalid or blank votes 25,359 0.08
Total votes 33,577,342 100.00
Registered voters and
turnout
46,500,001 72.21

14. Global Impact
 Trade cost will increase
 Higher tariffs on imports
 Freely trading will stop at a glance
 Small markets wont have chance to grow
 Employment opportunity will decrease
 Ireland, Netherlands and Belgium will suffer
a great loss as they trade with UK mostly.

15. Impacts on Currency
 The Sterling Pounds is falling against all
major currencies.
 Down by 2% against US dollar and hit the
lowest since 2009.
 Dropped 1.3% lower against the Euro

16. ECONOMIC IMPACT
• One in Every ten UK jobs are linked to the trade
with the EU. Therefore BREXIT might affect jobs
directly or indirectly.
• 61% of UK small business exports go to the EU.
Being able to trade freely with EU countries, with
no tariffs, helps small businesses in the UK grow
and create jobs. This might be affected.
• Impact of BREXIT could lead into lower trade
between EU and UK generating complications.
• It could also affect Foreign Direct Investment,
immigration and economic regulation of UK.

17. IMPACT ON SOCIETY
🞭 Being in EU means lower prices for UK families – because
it’s cheaper to trade and there’s more choice. If UK left the
EU, the cost of imports could rise the prices – leaving UK
families out of pocket.
🞭 Independent experts estimate the benefits of being in the
EU are worth pound of 3000 a year to the average UK
household- Due to lower prices and more jobs, trade and
investment. This will be all lost if UK leave the EU.

18. ⦿ From our discussion on BREXIT and its impacts
on Global terms will lead us to the conclusion
that as every coin have two sides, same as
BREXIT will give advantages to UK somewhat
but as its impacts may also damage or lower the
economy of United Kingdom and other
countries as well who currently trading with
them being in European Union member.