Common Agricultural Policy and the Uk Essay

14704 Words Jul 25th, 2015 59 Pages
The economic impact of EU membership on the UK

This note examines the various channels through which membership of the EU affects the
UK economy. A general sense of the EU’s economic impact can be gained by reading
Section 1 alone. Subsequent sections deal with particular issues, such as the EU’s effect on
UK trade relations, in more detail, and compare the UK’s situation with alternative arrangements. Contents
1

Introduction and summary

2

2

Cost-benefit analyses of EU membership

5

3

The effect of the EU on UK trade relations

6

4

Impact of immigration from the EU

16

5

The impact of EU regulation

20

6

Fiscal consequences of EU membership – the EU budget

23

7

The EU’s
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There are also fiscal consequences to membership as a result of the UK’s contributions to the EU budget; and consumer prices are affected through the Common Agricultural Policy and common external tariffs levied on imports. The fact of
EU membership may also influence decisions made by foreigners about whether to invest in the UK.
Understanding these economic impacts provides us with a framework to evaluate the costs and benefits of EU membership, but it does not tell us whether the UK would be better off outside the EU. In order to do this, a counterfactual scenario is required: for cost-benefit purposes, it is no use knowing that the Common Agricultural Policy costs the UK £10bn per year without specifying whether and how the UK agricultural sector would be supported in its absence. The purpose of this note is not to reach a conclusion on the economic merits of the UK’s EU membership (a brief overview of such cost-benefit analyses is provided in Section 2), but to describe some of its economic impacts, and the possible implications of alternative arrangements. Were the UK to withdraw from the EU, its subsequent relations would be the product of negotiation, and would be unlikely to mimic precisely the situation of another country. However, looking at other countries’ relationships with the EU – from the non-EU members of the European Economic Area (EEA)2 who adopt the majority of EU law in return

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