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Europe and the Single Market Originally the EU was envisaged as a market where goods, services, people and money could move freely. This would be done.

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Presentation on theme: "Europe and the Single Market Originally the EU was envisaged as a market where goods, services, people and money could move freely. This would be done."— Presentation transcript:

1 Europe and the Single Market Originally the EU was envisaged as a market where goods, services, people and money could move freely. This would be done via implementing common economic policies was the original date for this to be achieved, this has long passed and we still do not have a fully single market. Why is this? Technical barriers Labour mobility Legal differences Fiscal barriers One key advantage of unification of economic policy is the gains reaped via economies of scale. Other advantages include reduced admin costs (and therefore a fall in price of traded goods), increased employment (as if prices fall demand will rise and therefore stimulate output and hence create jobs) and also as production will rise it will lead to a general increase in prosperity. For unification, taxes would need to be harmonised, European politicians say this is vital, as tax competition is harmful. BUT some say its beneficial to the UK as it leads to more jobs, investment and productivity compared to higher tax regimes in other parts of Europe.

2 EMU and the introduction of the Euro As already known, on the 1 st Jan 1999 eleven member countries joined a single currency, fixing their exchange rates to the Euro. Notes and coins followed on 1 st Jan The European central bank is responsible for the monetary policy of these ‘Euro zone’ countries, which includes setting their common interest rates. The single currency should sharpen competition in Europe in 3 important ways: Cheaper transaction costs: As firms can trade without changing currencies and the risks that this entails. Stable exchange rates: this will make firms decision making simpler. Transparent price differences: this will sharpen competition

3 The Social Chapter This is part of the Maastricht Treaty signed by the then 12 member states in Its aim was to harmonise work conditions throughout the union i.e. it aimed to guarantee EU workers basic rights: The right to join a trade union. The right to take industrial action. The right to be consulted and informed about company plans. Equal rights for men and women. The right to a minimum wage and a maximum working week of 48 hours. The right to a minimum of 4 weeks holiday per annum. The chapter also had provisions for redundancies and it seeks to encourage employee participation and consultation. In 1993, the UK ‘opted out’ fearing extra costs on UK business.

4 Opportunities in Central ad Eastern Europe The fall of communism has had a huge impact, especially as many former communist states attempt to embrace capitalism and aim to join the EU. Central and Eastern Europe has a population of approximately 100m, large potential resources, huge agricultural sector, half their imports are bought from the EU and it accounts for 19% of EU exports (this figure is rising). These statistics offer huge business opportunities for EU firms. How have EU firms tried to take advantage? Joint Ventures Technical Co-operation Selling Expertise Dangers of trading with the East Eastern European incomes are 12% of the EU average; therefore they have very little disposable income. Political instability Bureaucracy and corruption


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