Political Factors/ EU

Question 1

European Union

Answer 1

The economic and political union of most European states aimed at reducing trade barriers and harmonising economic policy.

(27 countries)

Question 2

Eurozone

Answer 2

Members who use the euro as a currency

Question 3

Positives and negatived of eurozone

Answer 3

Pos - avoid fluctuating currency

Neg - loose control over munatry policy

Question 4

A single market

Answer 4

One market with a single set of rules and regulations
E.g worker rights and packaging

• free movement of products, services and people is also apart of the EU single market
• free movement of people allows recruitment from people in other countries

Question 5

Free trade

Answer 5

Involves agreement between countries to trade with each other without erecting barriers to trade (tariffs and quotas)

• free movement of goods

Question 6

Tariffs

Answer 6

A duty paid on imports (tax)

• can reduce imports

Question 7

Quota

Answer 7

A limit on the total quantity of a product that can be imported into a country in a given period of time

Question 8

How did UK businesses benefit from being apart of the European single market?

Answer 8

1. No additional import costs (tariff related)
2. More export demand
3. Common set of regulations to follow (more straight forward)
4. Bigger candidate pool
5. No additional paperwork and border checks

Question 9

How did uncertainty impact businesses?

Answer 9

1. Investment statement - investments were cancelled this was because of Brexit, businesses are weary, therefore less investment
2. Reduced customer confidence - individuals are unsure whats going to happen to the economy. May be a recession in the future therefore, they will save their money instead of spend it
3. Weak pound - there was less investment from foreign investors, so less demand for the pound

Question 10

Political stability

Answer 10

Means that government changes are limited. For example, the same political party with the same Prime Minister and cabinet members are in power for an extended period of time.

Question 11

Positive implications of positive stability for businesses?

Answer 11

• increased confidence to invest
• reduces need to leave domestic markets
• helps to plan for the future
• reduces risks associated with business decisions

Question 12

How might political instability impact international trade ?

Answer 12

• less international trade = political instability
• unstable government - less domestic trade
• business may be cautious if government attitudes may change on tariffs and quotas
• if other countries are unstable it may be to risky to trade with them

Question 13

Political factors affecting the European Union

Answer 13

• leaving the European Union
• completion policy changes i.e the creation of CMA
• privatisation i.e the gas and electricity is now part of the private sector
• legal changes or new laws i.e change to minimum wage
• economic policy i.e decisions to reduce government spending during a recession
• employment policy i.e how much government intervenes in the job market
• political manifesto announcements i.e energy price caps