One thing most people say is that Britain is a trading nation and they hope the UK can remain a member. However they then go on to make various conditions, saying it must be in the UK's interests to remain and depending on their viewpoints these conditions vary in strictness.
For economists the question is about the gains from trade. The lower the barriers to trade the more everyone benefits. There are various grades of economic integration and how far a country goes along this path determines what benefits they get. In order these steps are:
Free Trade Area - free trade in manufactured goods only as a rule
Customs Union - common external barriers with free trade inside the union
Common Market - Customs union plus freedom of movement for labour and capital within the Common Market
Economic and Monetary union - Common Market with one currency, eliminating the need for exchange rates
Political Union - One country
There are variations on these. The important point is that as countries allow greater integration they gain more benefits, but there are also some costs which include loss of domestic political control and in some cases the loss of the ability to pursue independent economic policy.
It would be useful to review the economic costs and benefits of EU membership now so that you can tell the political from the economics points that will be made in the next week or so.
Great Britain should only stay part of the EU if it is in the national interest. Britain needs to maintain its access to the European market so that they are still able to influence the development of the market and so other countries don’t slant the market against Britain’s interests. One of the main advantages of staying in the EU is that Great Britain is then part of a single market, where rules ensure countries don't throw up trade barriers. A problem with the EU is that if the consequences of the breakdown of the banking organisations become too bad, the danger is that countries become economic nationalisms, taking domestic control of their own economy, labour and capital. The problem with this is that countries may impose tariffs and other restrictions in trading in order to achieve this. This opposes the work of the EU as is questions unrestricted free trade. Great Britain can take one of three main actions: They can leave the EU and make their own path, remain as part of the EU but not get deeply involved in matters or lastly they could stay with deeper involvement. Considering Britain was one of the twelve founding countries of the EU it would be a shame to turn its back on membership completely, however involvement with the matters of the European Union should be dependent on how much importance it is to national interest and not just the current government.
ReplyDeleteFrankly I believe that it is ridiculous that we still remain in the EU. It seems quite apparent that the trade union, which we originally signed up to: the European Economic Community, back in 1973, no longer exists in the form that is still beneficial to us, rather than being part of an economic union, we are now members of a political union, which takes control away from our domestic government. Not only this but the supposed trade benefits which the union used to bring us also no longer exist; instead we must pay billions into the EU budget from which much of the money simply disappears into supporting farmers in Eastern Europe so that any money we gain from the extra trade is lost from our circular flow, ridiculously supporting those farmers is actually worse for us as the reason they require our help is the process isn’t economic enough there and the process would move and become cheaper elsewhere if the price mechanism was allowed to work properly meaning the goods were cheaper for us! Finally to those who refuse to believe that this problem outweighs the trade benefits, I ask why can’t the UK be like Norway or Switzerland, neither of which are part of the EU but enjoy all its benefits whilst enjoying none of the costs? I can only hope that the Daily Mail and Sun, which sway much of the British population with such force will for once have some sense and persuade the UK to leave this outdated and ill-functioning union.
ReplyDeleteCharles Cheesman
I completely disagree with Charles. Just because the EU is not perfect, it does not mean we should leave. Instead we should use our great influence in Europe, in order to have massive reform of the EU. We could repatriate powers such as on regional policy and state aids, so that British taxpayers aren't subsidising poor parts of Europe. In 1975, when there was a referendum on our membership of the Common Market, people started of as deeply opposed to the EEC and at the end Britain stayed in. You are right in saying that we pay loads into the Common Agricultural Policy, but Britain still has a rebate so we can get some of our money back. The problem with Norway and Switzerland is that they are extremely oil-rich countries in the North, and they have a different economy. Also, they have the worst of all worlds because they have access to the Single Market but they do not have any say on the rules regarding the Single Market because they have no voice in the EU. Even the Norwegian Prime Minister wants his country to join the EU. Also, if we were to leave the EU and have a free trade agreement that will take years to complete. Think about all the businesses - like Honda - which will pull out if we just left the EU. There should be a referendum, because we need a national debate in order to decide once and for all with fresh consent from the people. A strong alliance with big business, Labour, the Liberal Democrats and moderate Conservatives like Ken Clarke and Michael Heseltine, will defeat an 'Out' vote in a future referendum.
ReplyDeleteIt is a difficult toss up as to whether it is still beneficial for the UK to remain in the EU. While there may not be as many benefits to the trade union we originally signed up to in 1973, there are still big benefits to the open market to which we are part of. The primary benefit of this is that we can avoid the potential threat of trade barriers. It is inevitable that we will be having a great amount of trade with Europe due to its close geographical location to us and due to the interest in many of the (often culturally specific and diverse) products avaliable and so regardless of whether or not we leave, trade will continue. If we were to be subject to the barriers then it would make imports from Europe far more expensive, and it would have little comparable effect on European countries should we respond with our own trade barriers. There are also other issues such as the loss of the heavy EU subsidies for farmers.
ReplyDeleteThere are other negatives to leaving as well. Primarly, this is an issue of international relations and should we lose our place in the EU then we will have far less influence on European matters which are happening so close to us. Of course, it is important to weigh up whether or not we actually have any significant influence that we want or need to keep as it is at the moment.
However, we must be aware of the vast amount of money we pay for our membership as things are and that, should we leave, we will potentially be able to counter act many of the extra costs that would be incurred by our departure from the EU.
James Woodcock
Great Britain is one of the richest and most powerful countries in Europe and in the European union (EU). But when they joined the EU the didn´t change their currency, what is an important aspect for the choice of Great Britain of staying in the EU or not. But another important aspect is that Great Britain is a trading nation. Another important factor for the decision-making is the wealth of the other European nations as Great Britain has focused it´s market in Europe.
ReplyDeleteThat leads me directly to the affect of GB leaving the EU would have on the other EU countries. First of all a big part of the payments to the EU would get lost and therefor the paying nations would have to pay more to keep the payments to the needy countries affordable even though these would decrease. That means every nation would have less in the end and so the BIP would decrease in each country as well. That means they could afford less and as the British companies established their markets mainly in Europe the British goods will get bought less as well, what means that the demand curve for every product sold in the EU-nations will slope leftwards as the consumer income changes, ceteris paribus. But it also could result in a inflation of the Euro. As such a big money spending country leaves the EU, because it spends more money on the EU than it spends it shows the world that the European system is in a crisis and can´t ensure properly to pay back money the borrowed in time nations and banks will be unlikely to give money to the EU and therefor a theoretical supply curve slopes upwards as the conditions for lending and borrowing money will change and borrowing money will get more expensive.
Lorenz Essing
I do not see the option of leaving the EU and signing up to a deal similar to Norway's (that we would have the trade concessions but could have no real input into decisions made about the European economy as we do now) to be at all plausible. Norway is allowed to vote on some minor European decisions regarding Forex and drug policies however the EU allows them no input into major economic issues and , us being such a large trading partner with European countries, need input into these potentially fundamental changes to the EU. Besides, even if we were to wan to sign up to a similar deal, withdrawal from the EU would still require negotiation with other member states, even to establish the same level of access to the European market as Norway. Others hope Britain might get the same deal as Switzerland, which is a little further removed but gets good access to the single market. The EU already regrets giving Switzerland the Swiss option, so it is scarcely likely to give bigger, more troublesome Britain the same deal.
ReplyDeleteLouis G-E