European Union Flashcards
Define and explain what the EU union is
Established in 1958, the European union is a political and economic union of 28 European Countries, including France, Germany, Spain and in 2018 the uk.
One of the purposes of the EU is the operation of a single European Market, the free movement of goods and people within all 28 countries, of the 28 countries 19 use the same currency the Euro.
Companies based in the countries outside the EU may still have to pay tariffs.
Impact of the EU on businesses in the UK
Movement of goods, Uk businesses gain access to the 28 member states and their markets free to trade barriers or quotas.
Movement of labour, Uk businesses are able to access skilled workers from throughout the EU with no barriers to movement
Movement of capital, Uk businesses have access to funding from any and all countries and investors within the EU.
EU subsidies and quotas, the EU offers financial subsidies to farmers etc so they can make a profit.
What are the disadvantages of the EU on businesses and stakeholders
Drawbacks
Eu rules and regulations tend to add significant costs to trading in the single market
UK businesses still have to cope with the currency exchange fluctuations.
Many policies adopted by the EU seem to disrupt markets such as food markets which negatively affect farmers.
What is meant by the Euro and the Eurozone
Countries in the eurozone have to abide by certain rules, including policies set by the European Central Bank
Stable prices each member state must not be 1.5% higher than the average taken from the three member states that have the lowest inflation
Exchange rates, the euro is traded on international markets against all currencies.
Evaluate the benefits and costs of the single European currency
Costs
As businesses and individuals in the eurozone have to trade in euros they have less control over interest rates as this is done by the ECB, as a result this may become a huge extra cost if raised significantly.
As the economies in the eurozone still operate independently, the business cycles may be different.
As the eurozone countries are linked together any external shock to one country will affect them all.
Benefits
As the euro is a much stronger currency than some of the eurozone members, this will be seen as a lower risk for those countries.
With a single currency, countries in the eurozone can trade with each other without costs and risks
Interest rates are more stable and lower in the eurozone.
Evaluate the impact of the UK having an EU membership on UK businesses
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Able to gain better export and import opportunities for uk businesses
Travel within EU countries is easier as there are fewer border controls
EU funding has helped with UK businesses stay maintained
UK businesses cannot freely gain access to skilled workers from countries outside the EU
Uk businesses are not free to trade globally without restrictions due to EU rules.
Evaluating the impact on UK businesses of not being a member of the EU
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Uk businesses may have to pay tariffs and be governed by quotas when trading with the EU.
Uk businesses still must abide by the regulations of the EU when trading
Businesses may not have the same access to workers at a cheaper cost from the EU.
Farmers will no longer receive the subsidies from the EU
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However, the UK will not have to pay billions of pounds to the EU each year
Uk has better control over immigration
The UK government can make trade agreements with other countries outside the EU
What are the advantages of the EU on businesses and stakeholders
Businesses can freely trade with other Eu states, customers and businesses with no additional tax costs.
Eu citizens can move freely across the EU to gain education and employment opportunities
Businesses are able to access developing economies allowing them to grow and expand sales and be more profitable
