European union

Question 1

European union

Answer 1

The single market came into operation in 1992 and removed barriers to movement of people and goods, this created the European Monetary Union.

Question 2

Benefits of EU (single market) 1

Answer 2

Economies of scale - With 480 million consumers and almost 40% of the worlds trade there is scope for countries to exploit the economies of scale. Freedom of movement for all factors of production between members should lead to a more efficient allocation, increasing productivity.
Dynamic efficiency - The competitive environment should reduce monopoly power and increase innovation; inefficient companies will lose market share. This will lead to cheaper products and more choice.

Question 3

Benefits of EU (single market) 2

Answer 3

For business there has been a significant reduction in export bureaucracy as open borders reduce costs and delivery times, Consumers have full consumer rights when shopping in the single market and there are no restrictions on what they can buy, as long as it’s for personal use, making the single market a domestic market for European business.
UK citizens have the right to work, study or retire in all other member states

Question 4

Costs of EU (single market) 1

Answer 4

There may be adverse impact on some sectors of a national economy as the increase international competition means some firms can’t compete as they lose their markets and jobs to new entrants.
It’s a work in progress, with gaps remaining in areas such as intellectual property rights, services, transport and energy.

Question 5

Costs of EU (single market) 2

Answer 5

The service sector has not increased competition to the extent originally envisaged
Delays have also effected financial services and transportation, where separate national markets still exist and the markets for gas and electricity have not been completely opened to competition. The fragmented nature of national tax systems also puts a brake on market integration and efficiency