The European Union & Business

A2 Business StudiesUnit 4

Aims and Objectives

Aim:• Understand how businesses are affected by

the EU.Objectives:• Define the EU• Explain how businesses are affected by the EU• Analyse the effects of EU enlargement• Evaluate the impact of the Euro Zone crisis

What is the EU?

• http://www.youtube.com/watch?v=RE6QgoykLZU&feature=related

• An organisation of countries aimed at creating free trade and growth through economic and political stability.

• UK joined 1973

• Did not adopt the Euro

The EU• 27 countries• Population of 500m• Accounts for 30% of

world GDP• Largest exporter

of goods/services• GDP per capita is around

35% less than in USA and15% less than Japan.

• Due to recent enlargement-Romania and Bulgaria

What does this mean for businesses?

• Common laws and legislation: competition policy, development, employment, trade policy, ensuring free trade takes place.

• No trade barriers within EU.• Currency fluctuations avoided for 15 EMU countries.• Opens up developing markets.• Free movement of labour – reduce costs.• Easier to attract foreign investment.• More stable economies – encourage investment.

EU Laws and Legislation

1. Using the video, identify four areas of a business operation which have been affected by EU legislation

2. Explain why a trade union might be generally supportive of EU workplace legislation

3. What objections does the small business owner have to laws passed by Europe?

http://tutor2u.net/blog/index.php/business-studies/comments/video-case-study-eu-legislation-impact-on-business/

Benefits and Limitations of Further EU Expansion

Benefit or Limitation?

• Potential for easier mergers and takeovers of businesses in the EU.

• EU decision making will be slowed down, affecting the time taking for policy to have an effect.

• Eastern European countries may experience more political and economicinstability than developed nations.

Benefit or Limitation?

• Should the EU enlarge with an unstable currency and instability in nations like Greece?

• Low cost imports from new countries may drive UK suppliers out of business.

• Immigration of new workers will swell the UK labour force – resulting in lower wages.

• Easier to outsource business operations to developing nations with low wage rates.

Benefit or Limitation?

• Access to huge new markets, allowing for potential growth driven by economies of scale.

• Funding to new member nations may result in higher tax rates in existing member countries.

Euro Zone Crisis

• http://www.bbc.co.uk/news/business-16290598?print=true

Euro Zone Crisis

Questions:

• What effect may the euro zone crisis have on UK businesses;– Investing in EMU countries– With operations in EMU countries– Who rely on imports from EMU countries

• What effect may the crisis have on the UK economy?

Euro Zone Crisis Hits UK Companies