Foreign direct investment can be described as money that a company invests in buildings, factories, machines or other infrastructure outside of the company`s home country. By investing internationally, a company can obtain the raw materials it needs for its production process. Investing in a developing country is profitable, because prices are often low and regulations lenient. It generates business for local firms and also brings in technical know-how. However, until recently, it had not been linked to natural resource depletion. FDI leads to an increase in natural resource depletion, while fostering dependency on income generated from that depletion.
external tariffs as the EU imposes some significant external tariffs on goods such as agriculture which results in increasing the price of some imports of food products. If the UK leaves the EU it might be able to arrange better trade deals with the other countries, despite to some emerging economies such as China and India which are already having impact on the EU world trade graph.
Secondly, as being a member of EU for so long, UK has made lot of investments in EU and earns revenue from them. Similarly many European companies have invested in UK but due to Brexit these investments may become less charming or appealing as it will force the foreign investors to go back to EU. For example, BMW Company has already warned their workers for the potential job losses in case Brexit happens. The exchange of assets investment between UK and EU are around 89.6% but the uncertainty about Brexit has resulted into 9.9% depreciation of pound as compared to dollars. Whereas, sterling has risen by 3.6% (Oxford,2016). If only both can shake hands on some mutual successful post leaving treaties, it might then can save the investments on both sides. Another alternative solution for UK is to make a European Economic Area (EEA).
Thirdly, another issue which UK faces is the exchange of workers between EU and UK. It has generated notable stress on areas such as housing and infrastructure. Migrants who come to work from EU also contributes in the economy by filling out labour shortage gaps in areas such as nursing and teaching. So if the UK leave the EU it might lead to the immense shortage of labours as in 2016 there have been some firms who are outlining the labour shortages, especially in areas such as agriculture and construction. If UK leaves, they will gain the advantage of restricting net immigrations but on the other hand it will be difficult for UK nationals to find work abroad. According to the record, there are 2 million British nationals who are currently working in EU. Similarly according to the survey by (RICS) around 176,500 people who are working in UK from different parts of the EU will be jeopardized as well (Guardian, 2018).
Furthermore, the basic and main problem for UK is the decline of the inward investment which UK receives from the EU. Currently the value of Pound has been fallen from 10 to 15 percent showing the negative impact on the economical condition in a longer run for UK. Nevertheless, the particular problem of the decline in Pound is due to the low wage growth which has risen cost push inflation. In future if the current scenario continues it might also trigger an economic downturn for UK.
If UK leaves the EU, even then it has to pay the EU to able itself in taking benefits
