In 1973 the United Kingdom joined the European Union and the Single Market. Through this partnership, both economies grew and benefited from each other. However, recently politicians have questioned the United Kingdom’s membership in the European Union and the Single Market, which led to political events such as the referendum for the Brexit. As the majority of the population decided to vote in favor of the Brexit, the necessity to analyze the dependency of the United Kingdom on the Single Market has increased.
This report provides an analysis of that dependency with respect to different groups of stakeholders, including companies in the industrial and service sectors as well as communities. The analysis is followed by an identification and evaluation of the most plausible trade alternatives. The findings of the report state that the United Kingdom highly depends on access to the Single Market on the short-term perspective, might be able to reduce it on the long-term perspective, but will unlikely become completely independent from the access to the Single Market.
Table of Contents
1. Introduction
2. The UK and the Single Market
2.1. The dependency of the United Kingdom on the Single Market
3. Possible Alternatives
3.1. Three core models
3.1.1. Soft Brexit
3.1.2. Bilateral Trade Agreements
3.1.3. Hard Brexit
4. Conclusion
5. Bibliography
Objectives & Core Themes
This report aims to analyze the economic dependency of the United Kingdom on the European Single Market following the Brexit referendum. It examines the significance of this trade relationship for various stakeholders, including industrial and service sectors, and evaluates potential post-Brexit trade models to determine the long-term feasibility of economic independence.
- Analysis of UK-EU trade volume and economic interdependency.
- Evaluation of stakeholder-specific impacts (financial sector, manufacturing, communities).
- Investigation of the "Soft Brexit" (Norwegian model) approach.
- Investigation of bilateral trade agreements (Turkish and Swiss models).
- Assessment of the implications of a "Hard Brexit" scenario.
Excerpt from the book
3.1.3. Hard Brexit
In the case of a hard Brexit, the UK would have to renounce its access to the single market and the customs unions associated with the EU and therefore comply with the World Trade Organization (WTO) rules for trade (Sims, 2016). This alternative to the single market comes with benefits, as well as costs. In terms of benefits, the UK would not be required by treaty to enforce EU legislation within its borders (Smith, 2016). Furthermore, the UK would not be obliged to contribute neither to the EU budget, nor to the requirements regarding the free movement of people and therefore regain full control of its borders (Cabinet Office, 2016). With regards to the costs of this alternative, several aspects need to be considered. First, the UK would forfeit its trade agreement not only with the EU, but also with the 53 countries with which the EU has trade agreements (Cabinet Office, 2016). Second, the UK would significantly reduce its bargaining power, as it would have to negotiate on its own and not as a member of the European regional trade bloc (Cabinet Office, 2016). Indeed, by being part of the single market, the UK has a stronger position during negotiations (Dhingra, 2016). Third, the UK would possibly face some tariff barriers that could negatively affect several industries (Cabinet Office, 2016). For example, the automobile industry could suffer from the 10% tariff imposed on all cars exported to the EU, as in the first half of 2016, 57.3% of total cars exported from the UK were destined to the EU (BBC, 2016). Furthermore, according to the UK Treasury, pursuing this alternative would lead to a decrease in GDP of 9.5% and a net impact on the public sector receipts, with a loss estimated between 38 billion pounds and 66 billion pounds per year after 15 years (The Guardian, 2016). This could lead to an economic shock and downturn for the UK.
Summary of Chapters
1. Introduction: This chapter provides an overview of the UK's trade relationship with the EU since 1973, highlighting the economic advantages of the Single Market and the initial uncertainty caused by the 2016 referendum.
2. The UK and the Single Market: This chapter analyzes the deep economic integration between the UK and the EU, emphasizing the importance of the Single Market for the service sector and various business models.
3. Possible Alternatives: This chapter evaluates three potential trade models—Soft Brexit, Bilateral Trade Agreements, and Hard Brexit—as alternatives for the UK post-EU membership.
4. Conclusion: This chapter synthesizes the findings, suggesting that while the UK may reduce its dependency in the long run, it is unlikely to achieve complete independence from the Single Market due to geographic and economic factors.
5. Bibliography: This chapter lists all academic and journalistic sources cited throughout the report to support the analysis of Brexit-related trade impacts.
Keywords
Brexit, United Kingdom, European Union, Single Market, Trade Dependency, Economic Policy, Bilateral Trade Agreements, Soft Brexit, Hard Brexit, GDP, Service Sector, Negotiations, International Trade, Customs Union, Economic Stability
Frequently Asked Questions
What is the fundamental subject of this report?
The report examines the economic relationship between the UK and the EU and the potential consequences of the UK withdrawing from the European Single Market.
What are the central thematic fields?
The core themes include international trade figures, the reliance of the UK service sector on EU access, and the analysis of various trade models like the Norwegian, Swiss, and Turkish arrangements.
What is the primary objective of the research?
The goal is to determine the extent of the UK's dependency on the EU and evaluate the feasibility of alternative trading arrangements following the Brexit referendum.
Which scientific methodology is employed?
The report utilizes an analytical review of economic trade data, official statistics, and institutional policy reports to compare various potential trade scenarios.
What topics are covered in the main body?
The main body details the historical trade context, provides an assessment of sector-specific dependencies, and performs a comparative evaluation of the three core post-Brexit trade models.
Which keywords best characterize this work?
Key terms include Brexit, Single Market, UK economy, trade agreements, and economic dependency.
How would a "Hard Brexit" impact the UK's bargaining power?
The report notes that a "Hard Brexit" would force the UK to negotiate trade deals independently, significantly reducing its bargaining power compared to its status as a member of the EU regional trade bloc.
What role does the UK's service sector play in the dependency analysis?
The service sector is crucial because it accounts for nearly 80% of the UK's total GDP, making access to the Single Market and the free movement of people essential for its operation.
- Arbeit zitieren
- Jan Kachelmaier (Autor:in), 2016, Does the UK need access to the Single Market? What trade alternatives are there?, München, GRIN Verlag, https://www.grin.com/document/369746
