The EU was formed in Germany after the Second World War. It was seen as a peaceful way of dominating Europe. The formal agreement on its formation was made in 1957 known as The Treaty of Rome (Dinan, Desmond 1998, p 27). The UK did not join the integration then known as EEC until 1972(Jacobs, Francis, et al, 1995, p 359). The membership of the United Kingdom in the European Union has been a topic drawing conflicting feelings among the politicians, scholars and the general populace.
It is important to note that the United Kingdom refrained from joining the European Union in its initial stages of formation. The United Kingdom has since then been reluctant in giving up its sovereignty and adopting more pro integration policies despite the fact that the UK is one of the major powers in Europe. Though slowly, CAP is reforming. As a result its membership in the European Union, the UK farmers benefit from subsidies. Better deals benefiting the farmers are expected in future after further trade negotiations.
The cost of running the bureaucracy is estimated to be lower in the EU budget. This cost represents a very small percentage of the EU budget and many consider UK contribution to EU to be quite small. The total contribution is estimated by Westlake, Martin (1999 p 8-9) to be only 1. 5% of the UK. The EU has a uniform law on immigration; this has a huge impact on the composition of the UK population. Due to relaxed immigration laws the UK is set to benefit from cheap labor with people streaming in especially from eastern European countries such as Poland and Latvia.
Immigrants also take the jobs considered to be undesirable fill in United Kingdom labor market shortages. The UK citizens also benefit by getting jobs abroad and are free to travel and work abroad without many restrictions. The UK is said to benefit greatly through trade and investment within the EU. According to government figures 67% of Britain trade is with the EU (Crawford, Malcolm 1993 p. 36). The EU provides a ready and lucrative market for UK exports. The EU integration has a policy on competition enabling it to monitor and examine cartels.
It is also able to monitor the amount of competitiveness in the markets. This is important because it helps to check the quality of goods and services against their prices. For instance, the EU has taken measures against cheap exports from China because of their low quality and the unfair competition to European products. Another benefit accrued from their membership is enjoying reduced transaction cost as a result of abolished tariffs and the harmonized regulations. Though the CAP has been undergoing reforms, it has been largely inefficient.
This is especially so in providing subsidies to the agricultural sector. The EU puts target prices for agricultural commodities above the market prices which lead to high prices for consumers, higher tariffs on imports oversupply and finally the CAP budget is very expensive to taxpayers-it is nearly half of the EU budget. The UK agricultural sector is relatively small leading to the UK getting the least benefit from the CAP. This prompts critics to raise the question of why the UK is in the EU in the first place. Even after most members of the EU joined the Euro currency, the UK refused to do so.
UK politicians and scholars alike cited that the Euro does not meet the requirements of an optimal currency area. They also argued that the economic differences between and among the European nations will undermine a maintained success of the project. Currently the UK pound is stronger than the Euro. The feeling among politicians and the general populace is that they do not want to lose or reduce Britain’s monetary policy autonomy. There is a feeling that joining the Euro will be a permanent shift of domestic monetary sovereignty from UK to the central bank of Europe. Britain is also wary of interest rates change in other European nations.
There is an argument that the cost of UK membership way exceeds the benefit and it is estimated that the UK gives 8. 7 billion pounds a year to the EU as a subsidy (Minford, Patrick 1993 p. 700). This is a direct cost plus the indirect cost is estimated to be 60 billion pounds a year according to Bruge Group think tank. The cost of bureaucracy is estimated to be more than 50 billion pounds a year (De Grauwe, Paul 1994p. 806). The EU operates on the philosophy of a single market. This calls for free movement of labor. Unchecked inflow of immigrants has led to a strain to housing and other amenities.
With the current loss of employment due to the credit crunch, questions have been raised about the need of having immigrants competing with UK residents. There are also concerns that employers may prefer immigrants since they are cheaper to hire. The EU social policies have led to an increase in labor costs which has had a negative effect on the labor market flexibility. This has resulted to loss of employment and reduced competitiveness. Looking at countries such as Switzerland and Iceland, it is argued that the UK can get all the benefits of free trade without necessarily being in the EU.
(Switzerland and Iceland are non members but are some of the richest states in Europe). This countries benefit from EU despite being non members.
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