In joining the European Union, the United Kingdom has been affected in
many different ways. We have had the advantages and the disadvantages,
the benefits and the costs.
Advantages to the EU cover many fields; there is greater
specialisation and economies of scale, for example the more efficient
a firm is in producing their product then the bigger the scale of
production leading to higher capital for them and also leading to
There would be more competition involved as the removal of trade
barriers leads to more countries being involved leading to greater
ideas and more innovation.
Trade between member states becomes quicker and cheaper as the EU is a
customs union – a single market.
No tax tariffs will be imposed due to this and so this is another
benefit of being part of the EU. This leads to cheaper prices for the
consumers of all the imported products.
Consumers will also benefit from food heath and safety standards as
all goods that are produced in the European Union must now carry,
“Best Before” dates, price indicators and a list of ingredients,
colourings and additives that they contain. British consumers need not
worry about eating imported foreign foods from the EU as they all have
pretty much the same standards.
Problems arise with the unemployment levels, as there are more
businesses in every trade the less efficient firms tend to close down
leaving the people who were employed in them unemployed.
The admin costs are likely to be high as running a trade bloc incurs
high costs and it can be quite slow as it takes time to respond to
changing economic and political events.
Combining common economic policies may be beneficial for the EU as a
whole but could be damaging for UK firms in certain situations. A
decline in customer’s demands would normally mean that the UK
government would cut interest rates to encourage customers to keep
spending. However the EU economic policy may dictate that interest
rates are kept relatively high to combat rising inflation.
One question that has also been raised is that does the UK need to be
a part of the EU, or does the EU need the UK?
Mr. Blair believes that the jobs currently resulting from trade with
the EU would be lost if we left. However, a number of studies have
found that if the UK were to leave the EU then it would have little
impact on jobs, including a report by the National Institute for
Economic and Social Research.
Pain, N and Young, G., Continent Cut Off? The Macroeconomic Impact of
British Withdrawal from the EU, NIESR, February 2000. Republished as,
“The macroeconomic impact of UK Withdrawal from the EU”, Economic
Modelling, 21 (2004), pp. 387-408. They concluded that there was, “no
reason to suppose that unemployment would rise significantly if the UK
were to withdraw from the EU”. However, they argued that foreign
investment would fall, leading to a reduction in GDP of 2.25 per cent.