Economics Unit 3- The European Union

1. More Competition: This is an advantage because when there is free trade between EU countries, domestic firms have to compete with other EU firms. This means that they may have to lower their prices or improve the quality of their product. This means that consumers can benefit from lower prices and better products.

2. More Inward Invesment: This is a benefit because busiensses outside of the EU want to invest into the EU so they can access the large market (sell their products to EU customers). This means that the EU receives lots of investment from MNC’s which can create jobs and economic growth.

3. Economic Growth: This is a benefit because domestic firms can now export their products to many EU countries. This means that the exporting firms can benefit from higher profits and so the economy can experience economic growth. 

1. Job Losses In Some Countries: This is a disadvantage because the free movement of capital means that businesses often move to the Eastern European countries where labour costs are lower. This means that there will be job losses in the countries which have higher labour costs e.g The UK

2. Local Firms Close: This is a disadvantage because, as there is free trade, large busiensses from other EU countries can compete with the small domestic firms. This means that small domestic firms may close since they cannot compete with the larger businesses.

3. Costs a Significant Amount to be a Member: This is a disadvantage because it costs the UK billions of pounds every year to be a member of the EU. Also, the UK is a net contributor to the EU so we contribute more than we receive in funding. This means that the UK government has less money to spend on infrastructure and public sector services in the UK eg. Education and the NHS.

1. However, it is difficult to know whether the UK benefits from the EU or not. This is because the costs of being a member are very easy to measure but the benefits we receive in terms of trade are very difficult to measure. Therefore it is impossible to confidently answer the question.

1.  2. However, as fig 2 states, the predicted growth rates for developed economies (including the EU) is only 2.5% whereas the growth rate for developing economies is 5.5% This suggests that trading more with developing economies will be better for the UK and so we should leave the EU to be able to achieve this.

5   3.  However, the benefits of the EU outweigh the costs since 50% of our exports and 51% of our imports are with EU countries. This is a significant amount of trade. If the UK left the EU there would be a fall in economic growth since it would be difficult to import and export to the EU.