UK & The EU Flashcards
What happened to
a) exchnage rate
b) inflation
c) policy uncertainty
following brexit
Depreciatio, inflation rose impacting real wages, increase policy uncertainty
Fiscal austerity and brexit
Government triggered article 50 of lisbon treat in 2017
Took about 3 years for Brexit day to actually arrive
How much would EU lose following UK leaving
16% of GDP - we were 2nd biggest economy in EU (1st germany)
2 features of EU
Single market
Customs union
Single market
free movement of labour, capital goods and servies
Customs union
No tariffs on internal trade between EU countries, and a common external tariff on imports entering the EU.
Costs of leaving the EU (Or benefits of membership)
Trade
Investment - single market attracts FDI
Labour market - free movement of labour
Financial services
Trade as a % of national income
Exports are 30% of GDP. Nearly half is down to EU
FDI
FDI overseas and FDI into the UK are highest from in EU compared to US and RoW
What is the one of the main reason investors chose UK
Access to European market is attractive (so brexit means no more)
Europeans in labour market
Took up a lot of high skill jobs.
UK is at forefront for financial services industry -8% GDP.
Financial services - benefits from remaining in EU
Intra EU connections = 80/358 banks in UK are headquarted in another EU country
So a threat to any of these areas poses a clear risk to the
UK economy.
However… evaluate - 2 caveats/benefits
Trade and investment with EU countries will not completely stop. Since UK is a major trade partner.
UK can negotiate trade agreements with non-EU countries (since no longer part of customs union with common external tariff)
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