EU + Brexit Flashcards
How EU membership is important
- creates a large marker where businesses can compete and prosper in to benefit their stakeholders
- generates economic and political activity
- protects EU citizens rights with common laws
- achieves balanced economic growth across all of Europe
= main goals is to create a large marker where member states can trade freely (single market)
- single market means trade is made easier and so businesses can sell more, creating more wealth and jobs
Trade barriers
Countries that import more than they export should restrict the number of imports they allow in (QUOTA)
Another solution would be to put a tax on goods entering the country from abroad making imports more expensive and home-produced goods more cheap (TARIFF)
Problems with this:
- countries will retaliate against this
- quota or tariff trade war (trade barriers) so using them could mean the businesses in that country that trade abroad sell less
Removing trade barriers
- Can face a common external tariff with goods entering the EU from outside the bloc I.e USA
Non-EU businesses are encouraged to build their own factories in EU countries to avoid the common external barrier = created EU employment
- harmonisation of specifications, safety standards and testing requirements for products (adopting a similar set) but would mean that UK electrical business would need to meet its own standards as well as those of other countries if they wished to export them
- this method has found to be expensive and impossible for businesses to comply with all of them so a single set of rules makes trade easier + opens up a larger market
- labour market barriers are also being removed so now as long as you have the right qualification (doctor) then you have the right to work in any EU country so people can improve their own lives in the country to which they move
- now no restrictions on moving money around the EU so investment is encourages and promotes competition
How the removal of trade barriers encourages free trade
It brings competition :)
Good because it brings down prices and drives up quality and improves quality of customer services as businesses do what they can to be the best
What are the considerations for a UK business to trade in the EU
- SWOT analysis must be done to the proposed EU market
- must be fluent in the languages they’re working with so communication and understanding of culture is grasped
- exchange rates from Euro to Pounds
- can increase UK stability with no longer all the eggs in one basket
- can gain EOS
- need to establish good banking links, lawyers, distributors
- need to comply with common standards of specifications, labelling and quality
- need to ensure they have the best labour force in their business
Impact of BREXIT on UK businesses
Pound fell to its lowest ever value in 31 years immediately after the result was declared
No more free trade between UK and EU so supply costs will be higher
UK’s export business will be rocky beaches of the higher costs and tariffs seen across the supply chain
NEGATIVE BREXIT impact
labour/employment
Number of migrants looking for jobs outside the UK has risen
Unemployment rate in the UK is likely to rise to 6.5% due to recession - loss of 500,000 jobs
Currently 2.1 million European migrants in the UK working where there are shortages of skilled workers so they’re filling the gaps with their skills
Also a large contributor to the unskilled migrant labour market
Contribute to healthcare sector for employment
THERE WILL BE A HUGE GAP BETWEEN THE DEMAND FOR SKILLED WORKERS AND SUPPLY affecting the UK’s ability to recruit international talent
NEGATIVE BREXIT impact
UK exports taking a hit
UK exports £133 billion worth of goods to the EU
UK will experience a loss of at least 4.5 billion a year
Need to negotiate a new trade agreement with the EU ideally
Could take a major hit on export businesses in the UK as their costs will hike up with the increased tariffs
UK businesses being less competitive in the EU markets and globally even if the businesses choose to maintain a competitive edge by decreasing prices = lower profits
NEGATIVE BREXIT IMPACT
Losing access to single market
EFTA with UK as the founding member but if EU change policies after BREXIT then the UK will lose its access to the single market
UK must negotiate free trade agreements with EU and other countries globally
Could lose £75 billion if they are excluded fro the single markets but wouldn’t have to pay the £9 billion towards the EU budget
NEGATIVE BREXIT impact
Reduced foreign investment
Higher trade costs after Brexit
Tariffs would likely decrease investments in the UK
UK leaving would have a negative impact in FDI inflows - likely to decrease by 22%
The UK being a part of the single market has attracted many foreign investors as they haven’t had to face high cost barriers and could easily export to other EU countries
POSITIVE BREXIT impact
Free for contributing to the common budget
2015 analysis - UK contributed £13 billion to the EU budget so £8.5 billion each year
Saves them from contributing every year
POSITIVE BREXIT impact
Free to make trade agreements
Opportunity to make business deals with countries around the world
Can now explore multi billion pound free trade deals with China and China now having greater access to the UK’s manufactured goods and investment
BREXIT will further reduce barriers to the UK’s service industries like banking and other UK goods
POSITIVE BREXIT impact
Lesser regulations and obligations
Gives the UK the option to not have to comply with EU regulations
The UK will not longer be obliged to pay the billions towards membership costs so it can spend all that money on its own growth
From a business perspective, the UK will be free trade and negotiate with other countries globally on its own terms
POSITIVE BREXIT impact
Migrants and labour
Will have to now accept the free movement of people from EU countries into the UK if it wants access to the single market
If it introduced a work permit system for EU migrants then it would require a lot of costs and paperwork to process the permits
POSITIVE BREXIT impact
Regulations affecting trade
Will have to abide by EU regulations I’d it wants continued access to the EU single market
UK’s labour markers and enterprise sectors are among the least regulated
