1. Government Policies Affecting Businesses
BUSS4 Political and Legal

2. The European Union (EU)
Britain is a member of the EU
The EU is a community of countries that form a single market
There are laws on the free movement of people, goods & services, and capital between all of these countries
At this time there are 27 members with 500 million people generating over 30% of the world’s economic activity

3. EU Expansion
There are advantages to the UK from the enlargement such as
A larger market to export to without paying import taxes or customs duties
The EU is a huge market (500m)
Compare this to the US which is a market of 300m giving the US a competitive advantage

4. EU Expansion
Freedom of movement of people gives businesses a source of labour that is often cheaper and skilled
Gives the economy an opportunity to grow in the long term (more factors of production)
This is often argued as a disadvantage because it puts downward pressure on wages but this does help to prevent wage inflation

5. Insert A grade application P288

6. Single European currency
The UK does not want to move from the pound to the Euro
The main reason for this is that they would lose their main tool to combat inflation
This means that UK Businesses have to worry about changes in the exchange rate
The pound is relatively weak compared to the Euro
This means imports are expensive (WIDEC)
Companies like Majestic Wine that import a lot of European wine will find their profit margins changing as the exchange rate fluctuates

7. Free Trade
The EU is part of the World Trade Organisation which seeks to promote free trade
If EU starts a trade war with any other country this will affect UK businesses
China is currently being accused of dumping cheap solar panels in the UK which is damaging EU competitors
The EU placed an anti dumping tariff on China which makes their panels more expensive
China retaliated by putting a tax on wine
Who knows what they could decide to put a tax on next
The UK recently tripled its business with China to GBPb15.9bn

8. There are four main areas that these laws affect
Legislation
UK businesses have to abide by laws set by the UK government and the European parliament
There are four main areas that these laws affect
Employment
Consumer protection
Environmental protection
Health and Safety

10. Employment Legislation
Employment legislation often creates extra costs for businesses
It is designed to give rights to fair pay, sick leave, maternity and paternity leave , relationships with trade unions, rights to sack or make staff redundant
It is meant to protect workers
Just keeping up with the law costs money and then there are the administrative costs
A Business may need to pay for advise
Legislation takes flexibility away from businesses which often means they are paying higher wage bills than they would like
See video -

11. Insert table on P290

12. Consumer Protection Legislation
Consumer protection legislation makes sure
The product does what it says it does
The products are correctly labeled and measured
The products meet safety standards
The consumer has the right to return or exchange faulty goods
It tries to prevent unfair competition by firms that take short cuts or use unsafe and cheaper materials to gain a competitive edge

13. Environmental protection legislation
Perhaps more than others these laws are seen to add cost without having an upside
It is difficult when you compete with other countries that have less stringent environmental laws ; their costs will be lower and hence prices may be lower
Health & Safety Legislation
This is designed to ensure the safety of employees and customers
Add A grade application P290

14. Evaluation
Legislation seeks to ensure that all firms compete on a level playing field
This is a noble goal but with increased international trade this legislation can affect costs and make firms uncompetitive; global laws are never going to be identical
There is a lack of evidence to show that market forces will drive out unscrupulous firms and therefore government should not intervene