REVIEW 8.1 EUROPEAN UNION

The single market means – 1. No protectionist measures between member states 2. No border controls (Schengen) 3. Free movement of people 4. Recognition of qualifications 5. Making taxes and laws should all become similar.

The Single Market Single Market This means the economies of the Union allow the free movement of labour and capital. Custom Union: This is a group of countries who have free trade between the member states but a common external barrier. Single Currency: A group of countries agree to adopt the same currency and to have monetary policy.

Advantages of Single Market: Specialisation and economies of scale Free movement of capital Free movement of labour Competition Lower prices and higher standards of living

Disadvantages of Single Market Job losses Attract capital and jobs away from other countries Manufacturing firms are attracted to the low labour capital Multinational companies to drive out local firms.

The way the EU works Member states make contributions based on the size of their economy, therefore Germany pays a lot and Greece pays much less. These contributions are then shared out by member states. Ireland is a good example of a country who has done well from this system. Single Currency – Advantages: Elimination of exchange rate risk Price transparency Transaction costs Employment Long term planning Single Monetary policy (Through borrowing).

Disadvantages One interest doesn’t fit all – Germany v Greece. Loss of freedom over monetary policy. Sensitivity to interest rates Recession