trading bloccs

Question 1

effect of UK business of the UK not being in the EU 9

Answer 1

-less competition from EU business, meaning they may be able to increase the amount of sales to UK consumers

• UK businesses don’t have to alter the specification of their product to suit European laws and regulations, UK businesses now have regulatory freedom in the global markets

-UK businesses must pay transaction costs to covert pounds into euros. UK businesses face extra costs when importing from or investing in the EU

-foreign multinationals may prefer to locate in the EU rather than the UK. reduces the demand experienced by UK subsidiary businesses who supply goods and services to foreign multinationals

-businesses will find it more difficult to recruit workers from the EU. not as skilled employees and may have to increase wages in the UK to address labour shortages

• UK businesses will not be able to apply for EU grants and subsides. valuable source of finance is lost that may have to be found in another way

-UK don’t have free access to EU single market of 500 million consumers. reduces potential sales, profits and dividends to shareholders

-new UK free trade deals with fast growing emerging economies might see a surge in the demand for UK businesses products. growth in the market

-a fall in UK payments to the EU could fund increased investments in technologies and better training for uk workers
-increased oppertunity for UK residents to find work and lead to a slower growth of house prices and rent

Question 2

what are the effects of Brexit 5

Answer 2

• the pound sterling fell in value- this increased the cost of imports, thus fueling cost-push inflation

-a method of growth for UK small and medium sized enterprises was to export to the EU, this no longer exists- making it harder for smaller enterprises

-orders shipped by UK exportersare taking longer to process at customs- halt in production which can impact the businesses overall profits

-some UK businesses are now locating branches in the EU as means of having easier access to their EU customers- uk residents are loosing jobs, impact economy

-Brexit is predicted to reduce UK GDP by 4% in 2022/23. meaning less taxes for the gov resulting in more gov borrowing

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