The Benefits and Controversies of EU Membership in Britain
The Benefits and Controversies of EU Membership in Britain

The Benefits and Controversies of EU Membership in Britain

Available Only on StudyHippo
  • Pages: 11 (2883 words)
  • Published: July 14, 2017
  • Type: Research Paper
View Entire Sample
Text preview

Membership in the EU is of great importance to British citizens as it provides benefits in areas such as economic growth, governance, and general welfare. Although there has been controversy and discussion surrounding this issue for more than 25 years, membership remains increasingly crucial for Britain due to the ongoing expansion and development of the EU.

The future of the European Union largely depends on the current decisions being made about Britain's relationship with it. This issue has been a subject of dispute in British politics for 50 years and has undergone several stages of debate. At first, the British government chose not to participate in the EU but eventually agreed to join for collaborative benefits among European nations.

The purpose of creating the European Union was to prevent future conflicts between member states resulting from two world wars and a

...

n economic downturn. The original founders, comprising France, Germany, Italy, Belgium, the Netherlands, and Luxembourg were later joined by Denmark, Ireland and the United Kingdom in 1973. To eliminate any animosity between countries including France, a 'High Authority' plan proposed by Jean Monnet and Robert Schuman in 1950 recommended control of three nations.

The idea of Monnet and Schuman was to jointly control coal and steel production among their countries, opening the possibility for others to join. This led to the creation of the European Coal and Steel Community (ECSC) through the Treaty of Paris in 1951, initially comprising Luxembourg, Belgium, Italy, and the Netherlands. The success of ECSC paved the way for further integration when Rome Treaties were signed in 1957 to establish a common market or European Economic Community (EEC), aimed at eliminating trade barriers. As

View entire sample
Join StudyHippo to see entire essay

it expanded from six members to twelve by 1986, EEC changed its name to European Community (EC). Its official emblem features a blue flag with a circle containing 12 gold stars.

The Maastricht Treaty, signed in 1992, changed the name of participating countries to the "European Union" with the aim of securing lasting peace and prosperity for its citizens. This was achieved through eliminating trade barriers among member states, resulting in improved trade of goods, services, people and capital that strengthened political, economic and cultural ties within EU nations. Furthermore, an Intergovernmental Conference (IGC) scheduled for 1996 would further expand and enhance the EU.In June 1997, the European Union held a meeting in Amsterdam to assess progress towards enlargement, with a focus on central and eastern Europe. Heads of State or Government were present at the gathering, which resulted in the creation of a new Treaty of Amsterdam. The treaty emphasized the importance of strengthening existing bonds within the EU before expanding eastward and southward. One month later, in July 1997, proposals were put forth for incorporating Poland, Hungary, Czech Republic, Slovenia, Estonia and Cyprus into the EU by 2005. Given Europe's history involving two world wars, reconstruction - both physical and economic - was deemed necessary.

Effective achievement of collective objectives was crucial in the aftermath of World War Two, making collaboration essential for a united Europe. Nevertheless, European integration has been consistently hindered by the UK despite being an EU member. This article aims to examine the reasons behind this obstacle and will specifically concentrate on the Single European Market's objective to facilitate free movement of goods, services, capital and people.

The aim of improving market

relations throughout Europe is to eliminate barriers to trade such as physical, technical, and fiscal obstacles. This will be done by promoting internal competition that complies with the competition policy. Additionally, the objective is to streamline the transportation of goods with value-added tax rates falling into two categories: standard between 14-20% and low ranging from 4-9%.

The term "single market" refers to the concept of a unified community patent and the free flow of services and capital. This entails the absence of restrictions on cash transfer and the elimination of discriminatory measures such as varying tax rates on investments. In 1992, an analysis of this market, known as the Cecchini report, was published.

According to the report, firms would save 200,000 million ECU, while generating 2-5 million jobs in the medium term. Additionally, they would provide 5-7% extra non-inflationary growth in the medium term. Nonetheless, the report received criticism for assuming that all proposals are carried out on time, and that the World or European economies are not in recession. Another assumption made by the report was that any labour made redundant by rationalisation would be re-employed. It should be noted that the report gives an aggregate view, and some regions or states may not see the same benefits. Furthermore, the figures are said to be approximate and may be biased as the report was commissioned by the EC.

Upon analysis of the Single European Market's (SEM) role, it is evident that the UK joined the EC driven by economic interests. The EC displayed a strong commitment towards establishing SEM and executing monetary union, both of which appealed to the UK. Workplace relations and growth suffered throughout

the 1960s, resulting in a recession. Nevertheless, during the late 70s, the UK government implemented an economic management free-market approach that ultimately revitalized their economy.

Starting in the 1970s, the UK's economy experienced growth due to its integration with Europe. By 1992, the Single European Market was completed and this led to increased trade. The EU eliminated all trade barriers, making customs procedures quicker and less expensive for UK traders.

Efficiency has improved for the European Union and its businesses due to reduced charges, such as freight, and faster delivery times. The UK's membership in the EU granted access to the Single European Market but also required alignment with policies related to social, regional, and environmental issues. Additionally, competition policy is a crucial factor that will be further discussed in part two of this essay.

The EU's competition policy, as stated by Roney (2000, p.105), aims to prevent anti-competitive practices and regulate market domination to ensure fair competition. The ultimate goal of the policy is to promote perfect competition throughout Europe. Although member states are required to follow the EU's competition policy when trading within the union, they are still permitted to enforce their own laws regarding competition within their borders.

Both the European and UK competition policies share many attributes, but they each developed independently. The UK's policy encompasses monopolies, restrictive practices, and mergers while the EU's policy is primarily based on articles 85 and 86 of the Treaty of Rome. The Social Policy is related to the Social Charter, which grants the right to freedom of movement and employment. Additionally, it requires that living and working conditions meet certain standards. Countries wishing to join the charter must

ensure their standards meet policy requirements.

The EU's social policy covers various issues such as equal treatment for all genders, rights for the elderly and disabled, and the harmonization of fundamental social rights for workers through the introduction of the social charter. Despite initially holding back, the UK joined the social charter in 1995; however, changes in working hours and minimum wage could have a significant impact on the economy and therefore require careful consideration.

After joining the social charter, the UK adjusted its policy to align with EU regulations on working hours and minimum wage. However, this caused a decrease in foreign investment, posing a direct impact on businesses. Nonetheless, the country's internal businesses remain unaffected due to their strong economic foundation. The Economic and Monetary Union (EMU) is the process of permanently fixing exchange rates or introducing a common currency among members. It also entails a single monetary authority that oversees money supply growth, interest rate policy, exchange rate policy, and foreign currency reserve control.

Economic union involves establishing a single market that eliminates trade barriers in goods, services, capital, and labour movements. This entails implementing a competition policy that permits firms to compete freely and enhances market operations. Additionally, it requires a social policy that demonstrates the benefits of a unified currency to consumers. Macroeconomic policies must be coordinated and inflation rates aligned, with fiscal policies harmonized. The European Union has long sought economic and monetary union (EMU) since the 1960s as it offers currency stability and furthers the integration of Europe. However, several political and economic obstructions hindered progress until the signing of the Maastricht Treaty in 1992. Weak political commitment,

differences in economic priorities, lack of economic convergence, and changes in internal currency markets beyond the Union's control have all contributed to past obstacles. The EMU will have several implications for the UK.

The UK initially showed reluctance to integrate into the European Union due to the combined effects of EMU and the Stability Pact, which required regulations on deficits. The integration process would result in loss of control over currency, fluctuating exchange rates, interest rates, money supply, deficit financing as well as national bank and reserve management control. These rights were critical for preserving the UK's status as an independent political entity. However, staying outside the community could lead to political and economic isolation; therefore, later on, the UK government decided to join the EU.

Britain joined after observing the economic success that resulted from integration. Economic and Monetary Union research indicates that Britain has consistently been a barrier to European integration hence hindering business growth in Europe. Currently, whether or not to join the European single currency is a significant issue facing Britain. Implementing EMU involves having a single currency across all EU nations managed by the European Central Bank (ECB) with members adhering to set rules.

The adoption of EMU is believed to result in the completion of the single market, which brings benefits since high transaction costs and unstable exchange rates impede full advantages of the internal market. The introduction of a single currency encourages stability and prosperity as EU member countries integrate more closely and require greater monetary coordination. Although the European Monetary System was a starting point, a single currency was required to accomplish this objective. The stability provided by adopting

a single currency will offer several advantages to both citizens and businesses in Europe.

The UK is hesitant about joining the EMU due to concerns that other countries will control their tax strategy and that the economic benefits, such as no exchange rates and lower interest rates, would be negated by a significant increase in UK corporation tax. The current rate is 31%, but joining EMU would require it to match the continental average of 44%. While recent UK tax policies have aimed to reduce burdens and encourage investment, continental taxes have increased. Harmonization of tax rates among EU member states would result in higher rates for the UK, as other states are unwilling or unable to decrease their tax burden. Institutional developments within EMU would eliminate the need for unanimous decisions regarding tax issues. The benefits of joining EMU include a more efficient single market with smoother operations due to the elimination of exchange rate adjustments that can negatively impact profitability.

Having a unified currency is crucial for European firms because slight exchange rate adjustments have the potential to disrupt contracts. A single currency that covers a large number of member states helps to protect individuals and firms from these disruptions. It also allows for fair comparisons of prices across the EU, which can benefit businesses by promoting competition and increasing trade within a single market.

Implementation of the monetary union will bring about numerous advantages, such as promoting growth and employment, ensuring price stability, and managing public deficits. These benefits will positively impact trade, resource allocation, savings, growth, and standards of living. The European Central Bank (ECB) prioritizes maintaining monetary and price stability by implementing the

monetary union. Additionally, eliminating foreign exchange fees and exchange rate cover charges estimated to range from 0.3% - 0 will be entirely eliminated.

The EU's GDP constitutes 4% of its overall economy. Adopting a single currency will enhance global stability, and the EU's prominent role in trade could lead to its currency becoming a major exchange and reserve currency, similar to the Dollar and Yen. Additionally, European companies may be able to use their own currency for international trade transactions involving importing, exporting, and invoicing goods.

The prospect of a single currency has created concerns about national sovereignty, leading the UK to opt out. However, participating central banks will collectively manage EMU's monetary policy and exercise joint monetary sovereignty, sharing responsibility for a strong global currency. The UK fears giving up its ability to use monetary policy to stabilize the national economy, as this power will be transferred to the ECB. The ECB will set a common interest rate and issue a single currency, while the Bank of England will become a regional agency with no power to alter local monetary conditions independently. Despite these concerns, profitability and investment can still be evaluated reliably.

The United Kingdom is not currently willing to relinquish its economic decision-making power. Rather, it has chosen to abstain from giving control to the European Central Bank. This decision earns the UK government the right to preserve its own authority in regards to monetary and exchange rate policy, while forfeiting its participation in EMU matters and prohibiting their ability to appoint members to the central bank, with the Bank of England being excluded from participation. The choice to remain separate from a unified

currency entails multiple implications, as conveyed by an organization called Britain in Europe. They assert that without integration into Europe, the UK economy will suffer and face decline. By joining the single currency, the British economy would be fortified with more stability, investment opportunities and global recognition. Remaining detached would leave the UK unable to progress forward.

Britain, within the single European currency, will take the lead in managing Europe for our benefit and with genuine influence to effect change. Professor Patrick Minford, a distinguished British economist who supports the single currency, has stated that the benefits of a single currency, primarily in the form of lower transaction costs, will outweigh the costs discussed only when a higher degree of integration is achieved. Minford compared this to the integration between Wales and England. He also stated that businesses should strive to acquire the advantages of a single currency as soon as it's safe to do so. However, caution and progression are required for safety, and most EEC countries, including the UK, are not yet prepared for it.

While Patrick Minford's argument for the single currency enhancing the EU's economy is convincing, the impact on the UK remains uncertain. Rushing into adoption would be unwise; it would be better for the UK to observe other nations' experiences before making a decision to join. Preparation for eventual adoption is crucial, as implementing a new currency involves technology and societal changes. This decision impacts both businesses and the public, and is a greater decision than the 60's decision on integration. As such, there is divided opinion amongst the British population on whether to adopt the single currency.

The UK

may choose not to join due to the concern of losing national sovereignty, which means losing power. Two comments made during a debate on the single currency in 1990 highlight this argument. Conservative Mr. Anthony Nelson questioned the idea of sovereignty if a country is economically dominated by a neighbor, which contradicts the pro-single currency stance. Meanwhile, Labour member Mr. Robert Waering highlighted that remaining outside an expanded Europe with a central bank and single currency may result in diminished sovereignty. He expressed his worry about losing access to funds, which would negatively impact his ability to advocate for the job market in Liverpool. Britain has benefited from being a great trading nation, and its position relies on its relationship with Europe.

I'm sorry, but there is no text provided. Please provide the text that needs to beand unified with its intact.

Except for Britain, the euro is considered a political accomplishment that could impose an economic hardship in all EU countries. The French Prime Minister and German Chancellor have recognized the potential difficulty of EMU, especially in the near term. To make an economic case for it, supporters of EMU have had to exaggerate its advantages and minimize its costs.

By becoming a part of EMU in the UK, there may be an upsurge in taxation due to anticipated tax harmonization. In order to counterbalance economic downturns in less affluent regions without the luxury of adaptable interest rates, transfer payments will be obligatory within a sole currency framework. A number of European policymakers regard the euro as a method for accomplishing political and fiscal unification.

If a comprehensive fiscal policy were implemented, the UK would likely become

a significant net contributor. Currently, the UK has the most competitive tax regime in the EU, which could be negatively impacted if fiscal policy was standardized. Although there are costs associated with joining the single currency, it is clear that upon evaluating its pros and cons, benefits outweigh drawbacks. Remaining outside of it indefinitely may not be feasible for the UK as European businesses may choose not to trade due to reduced expenditures on transactions within the single currency zone. Additionally, outward investment from the UK may decline as foreign companies establish themselves in France for access to German material supplies. Therefore, Britain must decide whether it wants to remain an independent entity or a part of Europe.

Get an explanation on any task
Get unstuck with the help of our AI assistant in seconds
New