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Pros and Cons of UK Leaving EU

Pros and Cons of the UK leaving the EU – Introduction

The relationship between United Kingdom and European Union (EU) has is one of the most discordant issues in contemporary world politics. Prior to 2012, Britain used to possess an ambivalent relationship with EU and both the parties endeavored to put diplomatic efforts for the purpose of freeing up trade as well as expansion of their participation in UN policy formulations (“The UK and the EU”). The scenario changed since 2013 when the British Prime Minister David Cameron put forward the plan of holding a referendum on continuation of their membership with European Union. Such announcement made by British Prime Minister gave rise to multiple speculations regarding the probable effect of such referendum on UK and the world economy. As no member nation has exited the union prior to this declaration of referendum, the degree of speculation has become more prominent. Recently, Mr. Cameron has downplayed the possibility of an early referendum on the ground that they will need more time to present better negotiations in terms of acquiring more freedom in trade relationships and other regulations. Accordingly, he announced that it will take at least till end of 2017 to draw a conclusion on EU and UK relationship. However, significant arguments have already been originated in support or against of such referendum (“Viewpoints: How experts see UK role in EU”). The paper will explore all such pros and cons of UK leaving European Union as identified by economists and politicians.

Discussion

UK holds a significant part in influencing regulations and policy formulations of European Union. However, recent measures taken by UK gave rise to the question whether the country should remain a part of EU or not. In the next segment, the arguments in favor of UK to remain as a part of EU will be analyzed.

Pros: UK Should Leave EU

  • For Enhancing Trade Relations with Other Countries outside EU

It has been observed for a long time that many European countries such as Switzerland and Norway are operating successfully in the global market without participating in EU. Both of the countries operate as single markets and do not follow any regulations or legislations incorporated by European Union in their national activities through agriculture, service sectors, home affairs etc. The countries are liable to take their own decisions regarding international trade and are not restricted by imposition of regulations by any third party. UK, in order to enjoy such freedom in enhancing their trade relations with all the emerging and economically advanced countries in the world, must come out from EU (“House of Commons”).

  •  To Obtain a Cheaper Import and Export Activities 
Pros and Cons of UK Leaving EU
Figure 1: Share of UK Import and Export in relation with EU

Source: (“The UK Should Leave the European Union”)

Such separation will enable UK to establish bi-lateral trade agreements free from EU restrictions which will in turn accelerate the expansion of export market and the country will be able to tap lucrative business opportunities with the promising export markets such as Brazil, China, Singapore and Russia. Apart from that, EU puts restriction for importing goods from a number of foreign countries. After separation from EU, the country will get an access to the import relations with all other countries (“The UK Should Leave the European Union”). Apart from that, being an integral part of EU, UK has to bear huge costs in terms of membership fees and other hidden charges and tariffs which makes the imports costlier. If UK exits EU, the country will be able to source cheaper imports and as a result, they will also be able to incorporate lower tariff on food items which are imported from non-EU countries at a lower rate (“Pros and Cons: Great Britain in the EU”).

  • More Savings for Public Spending
Pros and Cons of UK Leaving EU
Figure 2: UK’s Annual Contribution to EU Budget

Source: (“The UK Should Leave the European Union”)

According to the reports from UK government, the country contributes annually more than 14 billion in the budget of EU whereas EU assigns 10 billion only for enhancing the country’s interest. From such allocation it is evident that UK is incurring net loss of 4 billion approximately in each year. Therefore, separation from EU will enable the country to secure the amount of recurring loss they are experiencing each year and they will be able to spend the amount of money on infrastructural development, healthcare and for addressing other concerns in public sector within the country (“The UK and the EU”).

  • Boost up Employment

Some economists are on the opinion that separation from EU may lead the employment level of UK boost up significantly. Being freed from strict governance and regulations as imposed by EU, all the medium and small scale industries will be able rise substantially. Such expansion of industries will certainly facilitate the economy to boost up its employment ratio. According to the management of Bruges Group, more than 90% of the multinational corporations in UK operate independently, without any influence of EU trading regulations (“The UK Should Leave the European Union.”). If UK is discharged from the boundaries of EU, such corporations will be able to generate job opportunities for over 1 million citizens within the economy.

  • Sound Control over Domestic Issues

Currently, for most of the domestic issues UK depends upon EU and other influential third party interventions. For instance, in order to control issues related to natural disaster and distribution of water resources, UK along with Germany and France, has to rely on the judgment provided by the governing body of Brussels, which is one of the major institutions of European Union. Such problems can be managed more efficiently at the national level but involvement of EU in turn leads to incur additional cost for all such countries. If UK separates from EU, collaboration of public and private enterprises will ensure better management and more proportionate allocation of existing resources (“The UK Should Leave the European Union.”). As UK’s exit from EU will enable the country to secure an additional portion of its Gross Domestic Product (GDP), the government being aware of the nature and extent of the problem, will be able to provide better solution to the existing problems, both financially and in administrative way (“EU elections 2014: What has the European Union done for us?”).

  • Strong International Position of UK

Most of the critiques have mentioned that if disengaged from European Nations, UK will not lose their commanding position in the global economy in any circumstances. The country has already developed considerably strong military base as compared to any participants of EU. UK also holds significantly strong position in many other renowned international institutions such as North Atlantic Treaty Organization (NATO), World Trade Organization (WTO), International Monetary Fund (IMF) and World Bank (“Viewpoints: How experts see UK role in EU”). Acquiring significant positions in all such institutions will strengthen their voice while claiming global rights as well, irrespective of its association with European Nation (“The UK and the EU”).

  • Restriction on Migration of Citizen from other European Nations

According to the statistics of 2010, UK witnessed more than 27% of the total number of migrations into the country from various participant countries of EU. In the year of 2011, it was estimated that approximately 2.3 million of the UK population were the inhabitants of EU countries. Huge migration facilitated by European Nations largely affects the scope for employment of the local population. According to the EU regulations, the healthcare and medical facilities as well as hospital care units are made available to Europeans and the non-UK populations of EU are provided with a special quota through which they will be able to avail all such medical facilities free or at a very low cost. This has increased the medical expenses of UK government to a great extent and also the UK populations are deprived from availing the medical advantages to the full extent. If UK comes out of EU, the government of the country will be able to impose better regulations in order to restrict uncontrolled migration from different European nations and control cross border activities. Restricting migration will reduce the additional expenditure of the economy in various sectors and facilitate the local population to take full advantages of employment opportunities, healthcare systems and other necessary sectors. The government will also be able to invest on research and development for further improvement and infrastructural development (“Migration and migrant population statistics”).

  • Political Considerations

Separation from EU will help the UK government in reformulating the country’s tax structure and incorporate more flexible tax legislation to the citizens, free from any influence of other parties. The legal system can be made more democratic. The country will be able to derive benefit from elimination of strict rules of the European Arrest Warrant, rather they will efficiently deal with the European Court of Human Rights as it not included in EU (“Pros and Cons: Great Britain in the EU”).

Cons: UK Should Not Leave EU

In spite of having all such positive notions for UK to leave EU, a large number of critiques are of the opinion that it can prove to be drastic for the country if it decides to leave EU. Such argument is based on the following reasons.

  • High Probability of Continuation of Strict Regulation Imposed by EU

Though the Prime Minister, David Cameroon argued that once separated, the policy regulations imposed by European Union will not be viable for the country, it is also true that while engaging in trade relations with other participating countries of EU, UK will be bound to abide by similar rules and restrictions. Understanding that more than 56% of the UK population has contradicted the proposition as they also believe that separation from EU will downgrade their reputation in global economy (“Public vote on EU membership would ‘resolve uncertainty’ for business, say Conservatives”).

  • Shortage in Inflow of Natural and Capital Resources

A large number of established businesses in United Kingdom are based on the supply of raw material and other resources from various countries under EU. The “Brexit” of UK from EU may lead such industries to experience scarcity in supply of such necessary elements. For instance, the airbus manufacturing units of UK are highly dependent on Germany and France for procuring technological support. Therefore, the industry fears that such partition of UK from EU will hamper smooth running of their business activities. Critiques have also mentioned that the unemployment ratio is bound to increase if the separation affects such industry operations adversely (“The Meaning of a British Exit from the European Union”).

  • Exim Policy and Unemployment

According to the spokesperson of Labor Party, Emma Reynolds more than half of the exports of UK is comprised of different nations of European Union. Such trade relations are also responsible for securing more than 3 million of job opportunities for UK residents. Therefore, she stated that split of UK from European Union may create disadvantageous situation for the country, as in such scenario UK will have to participate as an isolated player in international trade. In fact, once isolated, the country will have to formulate its own trading rules but how other countries will react to such policy formulations is also uncertain. If the country fails to capture positive trade response from other EU and non-EU nations, it will substantially affect the import and export activities of the country as well as its employment rate (“Pros and Cons: Great Britain in the EU”).

  • Business Risks

Changes in policy regulations always create business risk for any industry operating in the economy where such changes have been amended. As it is known that Brussels, Berlin and Paris are considered as the business capital of European Union, business organizations operating in such locations have the power of influencing business decisions of other organizations involved in similar trade. Therefore, exit from EU may influence such organizations operating in business hubs of EU to restrict other organizations as well from engaging in business relationship with United Kingdom. Moreover, according to BBC News Report, considering the amount of facilities gained by UK economy from EU, contribution of UK in EU budget is negligible. Therefore, expansion of business ventures after leaving EU may prove to be very costly affair for the country, as a result of operating in a single market (“If Britain leaves Europe, we will become a renegade without economic power”).

Conclusion

In this essay, some of the most important pros and cons of United Kingdom leaving European Union have been highlighted after examining the point of view of critiques and economists on the referendum proposed by British Prime Minister David Cameron. Analyzing all the factors associated with the issue, it can be inferred that exit of UK from EU will benefit the country through eliminating trade restrictions, simplifying import and export activities, boosting employment rates, minimizing migration ratios and many more. On the other hand, such split may create scarcity for raw materials and other resources for restricting industrialization of the country, ignite unemployment, squeeze economic activities as well as expose severe business risks in United Kingdom. Therefore, no matter whether the country will exit the European Union or not, in both the scenarios, it will have to face strong favorable and unfavorable circumstances as an effect of its existing relationship with EU.

Also Study:

Brexit Positive and Negative Impacts

Impact of Brexit on UK Economy

Works Cited;
  • “EU elections 2014: What has the European Union done for us?” Freeman, C. The Telegraph. 2014. Web. 10 March 2015.
  • “House of Commons”. House of Commons. House of Commons., 2013. Web. 10 March 2015.
  • “If Britain leaves Europe, we will become a renegade without economic power”. The Guardian. The Guardian., 2012. Web. 10 March 2015.
  • “Migration and migrant population statistics”. European Commission Eurostat. European Commission Eurostat., 2015. Web. 10 March 2015.
  • “Pros and Cons: Great Britain in the EU”. Thenewfederalist.eu. Thenewfederalist.eu., 2012. Web. 10 March 2015.
  • “Public vote on EU membership would ‘resolve uncertainty’ for business, say Conservatives”. Tovey, A. The Telegraph., 2014. Web. 10 March 2015.
  • “The Meaning of a British Exit from the European Union”. E-International Relations. E-International Relations., 2014. Web. 10 March 2015.
  • “The UK and the EU”. The Economist. The Economist., 2012. Web. 10 March 2015.
  • “The UK Should Leave the European Union.” Debatewise.org. Debatewise.org., 2013. Web. 10 March 2015.
  • “Viewpoints: How experts see UK role in EU”. BBC News Europe. BBC News Europe., 2012. Web. 10 March 2015.

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