EU - Advantages and disadvantages table in GCSE Economics

Created by: George
Created on: 26-05-14 22:14


	EU
	Advantages The EU has a free trade policy which increases competition between firms. This means that UK companies have a greater incentive to increase efficiency because there is greater competition. Thus this leads to higher investment hence leading to increased quality and lower prices. The EU free trading policy enables UK firms to market their goods at a wider market. This means that there is greater demand for UK goods hence increasing output and allowing UK industries to benefit from economies of scale. This helps to increase GDP growth hence increasing the output of the economy. The free trade policy means that tariffs are not used. This prevents retaliation against UK goods and so this helps to maintain export markets and increase international trade. Thus this means that demand for UK firms increases. In addition the lack of tariffs means that foreign goods are cheaper thus reducing the cost of importing. As a member of the EU, the UK has political influence as the UK relies on financial markets. This is particularly significant as the EU represents a significant financial trading region and so by remaining part of the EU, Britain can more easily influence EU policy hence helping it to plan more effectively. This increases investment as it increases the stability and consideration for the UK.	Disadvantages The UK is a net contributor to the EU and so this means that it can create an opportunity cost within the economy. This is because it prevents the government from spending on areas such as education and healthcare which offer more substantial long-term benefits. As a result this means that in the long-term, EU membership can cause a decline in the output of an economy. Increased competition with European firms can mean that UK industries cannot compete. Thus, this means that the demand for British goods decreases causing output to be reduced. Therefore this can lead to a lack of business growth as this competition can create barriers to entry. Hence, this means that UK firms may not employ as many workers hence creating unemployment. Free trade of labour can increase the level of immigration. This can have a negative impact considering the large UK population, thus this can place pressure on public services hence requiring greater investment thus creating an opportunity cost. The EU can restrict political parties as it undermines the importance of national laws such as immigration. Therefore this can conflict with government policies which can undermines economic growth programmes hence weakening government objectives. The free trade policy of the EU encourages imports as it prevents countries from introducing tariffs. Therefore this can lead to an increase in the amount of imports hence therefore causing an outflow of money from the UK economy. This can create a deficit on the balance of payments hence therefore leading to reliance on foreign goods and services.
	Evaluation Overall the significance of the political influence that the EU grants is particularly important due to the influential markets that it presents to the UK. Therefore, this would help to minimise costs whilst exporting to European markets hence helping to reduce the price per unit for firms. Consequently this would increase the competitiveness of UK firms which is significant as it would lead to greater expansion which would offer a long-term benefit when trading with other regions. However, the level of influence Britain has over EU policy is unclear and so this means that this advantage cannot be considered significant as this uncertainty reduces the planning confidence of businesses hence restricting investment, slowing growth. Therefore I believe that the threat of competition to UK infant industries is more significant so overall the EU, in my view, is not as beneficial for the UK. This is because, considering the UK's unstable economic growth from the recession, by minimising competition, it would increase the demand for firms hence increasing output and employment if we left the EU.

EU

Advantages

The EU has a free trade policy which increases competition between firms. This means that UK companies have a greater incentive to increase efficiency because there is greater competition. Thus this leads to higher investment hence leading to increased quality and lower prices.
The EU free trading policy enables UK firms to market their goods at a wider market. This means that there is greater demand for UK goods hence increasing output and allowing UK industries to benefit from economies of scale. This helps to increase GDP growth hence increasing the output of the economy.
The free trade policy means that tariffs are not used. This prevents retaliation against UK goods and so this helps to maintain export markets and increase international trade. Thus this means that demand for UK firms increases. In addition the lack of tariffs means that foreign goods are cheaper thus reducing the cost of importing.
As a member of the EU, the UK has political influence as the UK relies on financial markets. This is particularly significant as the EU represents a significant financial trading region and so by remaining part of the EU, Britain can more easily influence EU policy hence helping it to plan more effectively. This increases investment as it increases the stability and consideration for the UK.

Disadvantages

The UK is a net contributor to the EU and so this means that it can create an opportunity cost within the economy. This is because it prevents the government from spending on areas such as education and healthcare which offer more substantial long-term benefits. As a result this means that in the long-term, EU membership can cause a decline in the output of an economy.
Increased competition with European firms can mean that UK industries cannot compete. Thus, this means that the demand for British goods decreases causing output to be reduced. Therefore this can lead to a lack of business growth as this competition can create barriers to entry. Hence, this means that UK firms may not employ as many workers hence creating unemployment.
Free trade of labour can increase the level of immigration. This can have a negative impact considering the large UK population, thus this can place pressure on public services hence requiring greater investment thus creating an opportunity cost.
The EU can restrict political parties as it undermines the importance of national laws such as immigration. Therefore this can conflict with government policies which can undermines economic growth programmes hence weakening government objectives.
The free trade policy of the EU encourages imports as it prevents countries from introducing tariffs. Therefore this can lead to an increase in the amount of imports hence therefore causing an outflow of money from the UK economy. This can create a deficit on the balance of payments hence therefore leading to reliance on foreign goods and services.

Evaluation

Overall the significance of the political influence that the EU grants is particularly important due to the influential markets that it presents to the UK. Therefore, this would help to minimise costs whilst exporting to European markets hence helping to reduce the price per unit for firms. Consequently this would increase the competitiveness of UK firms which is significant as it would lead to greater expansion which would offer a long-term benefit when trading with other regions. However, the level of influence Britain has over EU policy is unclear and so this means that this advantage cannot be considered significant as this uncertainty reduces the planning confidence of businesses hence restricting investment, slowing growth. Therefore I believe that the threat of competition to UK infant industries is more significant so overall the EU, in my view, is not as beneficial for the UK. This is because, considering the UK's unstable economic growth from the recession, by minimising competition, it would increase the demand for firms hence increasing output and employment if we left the EU.

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EU

EU

Advantages

Disadvantages

Evaluation

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