THE EUROPEAN UNION
Within this page, I'll take a look at what the EU is and the importance of it to the UK economy, and finally, I have wrote a in/out essay on the EU which may be examined but if not - gives a lot of material that will be good on any EU question which may come in useful for you. Please feel free to add any comments and any improvements!
What is the EU?
The EU is a Single European Market which was created in 1993, and lead to the EU developing into a common market. It went about this by creating free trade in goods and services, also allowing free movement of labour and capital between the member states of the EU.
The European Commision (EC) is in control of the EU to ensure that free trade occurs and make sure the SEM operates efficiently.
Advantages for the UK Economy of being in the EU
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Allowing free trade may increase demand for our exports as they may now be cheaper as they do not face tariffs/protectionism, therefore the benefit to the UK economy is an increase in exports, leading to an increase in firms output, increasing the amount of GDP, lowering unemployment, improving the BoP and should improve the standard of living.
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Allows free movement of labour therefore means that labour from Eastern Europe can move into the UK in order to fill shortages. The advantage to the UK economy is that it reduces cost-push inflation in terms of raising wages. Lower inflation means that we are more competitive as a nation, therefore should lead to an increase in demand for exports as we are more competitive leading to better economic performance. It can also help the UK to develop a new comparative advantage as they now have more skilled labour which may produce more efficiently, therefore leading to an increase in exports.
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Foreign firms outside the EU may invest in the UK in order to export to EU countries and avoid the EU common external tariff. Such companies such as Nissan and Toyota, who may position themselves in the UK to access the SEM.
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The UK benefits from EU policy such as the common agricultural policy that provides food security across the EU and in the UK, therefore as we are depedant on imports, this is important, especially considering the relatively low cost we pay to be within the EU.
Disadvantages for the UK Economy of being in the EU
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Free movement of labour may prove to be a drain on the UK resources. Such as people from the EU who come into the UK get health care, schooling and housing. This can have an impact on the standard of living within the UK. Remember, we are only a small country with finite resources.
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Is the EU single market really that important? The UK has the Transatlantic Trade Partnership with USA therefore we could increase trade with them and other developing countries which may seem more appropriate due to the lack of demand and consuming within the EU currently
See my essay below for a more developed reasoning between the advantage/disadvantages of the EU.
This website is very useful for more detailed EU notes: