United Kingdom became a part of the European Community back in 1973 when Edward Heath was in office. In 1975 the Labour prime minister Harold Wilson had a referendum on Britain’s membership with 66 percent votes came in favor of the UK staying in the Community.
Before the formation of the European Union, Tory Prime Minister John Major, pushed for and got an “opt out” clause for Britain. This meant that the UK was definitely part of the European Community and, but would not to participate in a single currency, and therefore was able to maintain the pound.
The formation of the European Union was able to eliminate barriers to entry into international market and most countries part of the Union to this day enjoy tremendous amount of advantages. The European union was formed in 1993 and UK has been a part of the EU ever since.
Now comes the interesting part, there is a referendum taking place that will on 23rd June 2016 decide whether the UK still wants to remain a part of the EU. Currently United Kingdom enjoys an overall strong economy providing a large number of jobs for people from EU states and well as non-EU member countries. Around 3.5 million British jobs are directly linked to British membership of the European Union.
However UK has also benefited tremendously from being part of EU, over 50 percent of UK exports are bought by the EU, needless to say the UK enjoys a huge market by being a part of the EU which it will have to give up if the people vote NO.
The UK also enjoys being a hub of investment and attracts a lot of business from all over Europe, with 74 percent of British exporters operating in other EU markets.
Benefits to the consumers are huge if the UK chooses to stay, the Brits enjoy lower credit card fees, mobile roaming charges, cheaper flights and compensation, these sorts of benefits cannot be achieved by the UK on its own.
The UK is currently a hub for a large number of EU member country students who come to the UK to get higher education. A large number of students also travel to other EU countries for work and education, if the UK leaves then these benefits will no longer be available as costs will go up and numbers will go down.
The decision for Europe is a more crucial one as Europe needs Britain’s defense capabilities. It needs Britain as a balance to German dominance inside the EU and as a counterweight to the Franco-German obsession with regulation.
Now what exactly are the risks that the UK economy might have to face if the result of the referendum turns out to be – UK leaving – as tough a question that is, the answer is equally challenging to comprehend let alone answer. They say we learn from our mistakes or better yet from other peoples mistakes, if only this ideology could be applied to the UK leaving or if it were as simple, as it’s never been done before so whatever outcomes we can report are only our best guesses and one can never be fully sure when the impact of the referendum is calculated to be on a massive level.
One of the benefits that for sure is to flow to the UK is saving of EU membership fee, Last year, Britain paid in £13bn, however it is debatable that the UK also benefits from being part of the EU and those cost savings drive down the net contribution, so if the UK saves it also loses on the benefits.
It would be important to note the rise in potential trade costs that the UK would have to incur if it wants to keep the stronghold it has in the EU market, if UK decides to leave that would drive the costs of exports higher making the goods and services more expensive in EU. Other EU states might grasp this opportunity to become cost leaders and take UKs share thereby leaving Briton with a possible trade deficit as 50 percent of its exports are made to EU member states. However one upside in the trade area is that the UK would be able to establish its own trade agreements.
Britain also benefits from trade deals between the EU and other world powers. “The EU is currently negotiating with the US to create the world’s biggest free trade area, something that will be highly beneficial to British business.”
Leading Brexit campaigner Boris Johnson, meanwhile, has proposed adopting a Canada-style trade arrangement. “I think we can strike a deal as the Canadians have done based on trade and getting rid of tariffs” and have a “very, very bright future”, he said. The idea was quickly dismissed by the PM, who said it would mean “years of painful negotiations and a poorer deal than we have today”.
Many argue that after leaving the EU, The UK could strike up a deal for a free trade that is to enjoy the benefits of free trade minus the regulation and extra costs that come in with staying with the EU. However it is debatable whether the EU states will welcome such terms that UK aims to achieve in terms of free trade after the split.
In the longer term, there are two very different views as to how the referendum might go down: pro-Europeans think the UK’s status as one of the world’s biggest financial centers will be diminished if it is no longer seen as a gateway to the EU, while Brexit campaigners suggest that, free from EU rules and regulations, Britain could reinvent itself
The French and the Germans have warned the UK stating “out is out” and there will be no favorable terms lets alone negotiations.
According to an opinion survey across all 28 member states, 54 percent of Europeans want the UK to stay — a solid but hardly overwhelming majority — while 21 percent want to see Britain leave.
Spain and Poland are most concerned with UK leaving and an overwhelming majority wants the UK to stay. UK has been a safe haven for a large number of Poles as many have good job opportunities in the UK that they might not get in their own country. The French aren’t as bothered with 41 percent saying Britain should stay in and 25 percent saying it should go.
David and Victoria Beckham have decided not be late to the party and have voiced their sentiments – that UK should remain part of the EU, some other notable personalities have also expressed their views in the wake of the referendum