Britain and the Eu

Topics: International trade, European Union, United Kingdom Pages: 13 (4715 words) Published: May 7, 2013
Assignment 1:

In 1957 the EU was fashioned to elevate the living standards of its members by encouraging peace, democracy and equality for the countries that had joined the partnership. Its aims were to end war and repair the division of the European continent. It has become a unique economic and political partnership consisting of 27 European countries with around 500 million inhabitants (see figure 1 in appendix).

This map shows the 27 (coloured) EU countries (Grey countries are candidates)

It was not until 1973, the EU’s first enlargement, that the UK became involved on account of the then Prime Minister, Edward Heath. The UK did not join the EU from the start as it chose to stay with a rival group called the European Free Trade Area. It wasn’t until the 1950’s that it became apparent the living standards of France and Germany surpassed those of the British and their Government (under Macmillan). Additionally, French president Charles De Gaulle vetoed their first application (1963) considering the UK as inappropriate candidates – not a good asset and a liability to the union.

Despite the assistance it provided other countries during the war and its eventual success, Britain suffered post-World War II with stunted economic growth, high inflation and poor industrial relations; her position in the hierarchy of the world had dropped and it was a difficult matter to cope with. The empire was falling and so was its trade.

Also, the US encouraged the UK to join, due to fears of France trying to take control of Europe, in attempt to balance out the power struggle.

It was Edward Heath’s opinion that due to its economic and political ills Britain would benefit from joining the EU; economically to increase trade and politically to form unity and stability for the failing empire. British membership was sealed by a referendum in its favour held in 1975. The general advantages of its membership include

• Free movement of goods and capital with other EU countries, without boundaries or border controls. • A circuit of diverse and new goods (through international trade) and equipment, skills, services and workforce/people – more workers results in a boost in tax revenue. • If more jobs are available people will be contributing in taxes rather than extracting with benefits. • Ease in the exportation of goods leading to a more competitive market and reduced prices for consumers. • An increase in population helps domestic demands – more products bought, more services needed. Disadvantages of joining EU

• UK cannot afford increase in population – heavy demand on schools, NHS and benefits. • Influx of immigrants leads to high competition for jobs, fewer jobs for British, more people requiring benefits, impact on UK residents – squeezing funds. • Tax increases to fund extra services needed.

• Exchange rates can influence the balance of payments negatively. • Free movement of labour could weaken the economy.
• Loss of independence.
• Draining of resources. Since joining the EU the UK’s trading market has suffered a deficit. Overall trade post-1984 has been substandard. • Benefits of international trade not shared equally.

• Outsourcing. Workers and services bought overseas for lower cost meaning UK suffers/loses trade.

The balance of payments is the record and measurement of payments and transactions between one country and the rest of the world. It includes imports and exports of goods (visibles) and services (invisibles), tracks the flow and balance of finances ranging from dividends and interest to investment, loans, transfers and trade credit, and the transactions and transfer of capital. These are categorised into three accounts: current, capital and financial. The UK’s gross domestic product rose by 0.5% in 2011, a rise following two consecutive quarters of negative GDP said to be the root of the recession....
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