Europe and the Eurozone

Question 1

Define the Eurozone.

Answer 1

The economic region formed by those member countries of the European Union that have adopted the euro.

Question 2

What is the purpose of the EU?

Answer 2

1. To create a common market where there is free movement of trade, labour and capital between member states.
2. Having a common unit of currency to develop a single European market.
3. Greater Collective Influence in the world.
4. Economic and food self sufficiency.
5. A “level playing field” (laws, qualifications etc)

Question 3

Consequences of Britain leaving the EU.

Answer 3

1. Advocates of ‘Brexit’ claim that Britain would have little trouble negotiating a free trade agreement with the EU once it left, because the UK has a large trade deficit with the rest of the Union: if trade barriers between Britain and the remaining member-states were erected upon exit, the EU would lose more exports earnings from Britain than vice versa.
2. Advocates of ‘Brexit’ claim that the UK would be freed from the burdens of EU regulation and hence able to boost trade with faster growing parts of the world, by eliminating tariffs and signing trade agreements without the constraints of EU membership.

Question 4

Considerations for Britain when choosing to leave the EU.

Answer 4

1. The EU buys half of Britain’s exports whereas the UK accounts for little over 10 per cent of exports from the rest of the EU, so the UK would be in a weak position to negotiate access on its terms.
2. Half of the EU’s trade surplus with the
   UK is accounted for by just two member-states: Germany and the Netherlands. Most EU member-states do not run substantial trade surpluses with the UK, and some run deficits with it. Any agreement would require the assent of the remaining 27 members, some of whom buy more from Britain than they sell to it.
3. Moreover, the UK’s access to non-EU markets is to a great degree determined by its membership of the EU, something that will only become more pronounced if, as looks likely, multilateral trade continues to recede in favour of bilateral and preferential trade agreements.
4. The UK accounts for around 4 per cent of global exports of goods and services, a proportion that is falling steadily as emerging markets become increasingly integrated into the global economy. On its own, the UK would have much less bargaining power than the EU.